By Maura Attardi
Regional Director of Education, Money Management International
A first year college student has many new challenges to embrace. Living alone for the first time, learning how to motivate themselves to study and go to class, even learning how to do laundry. As a college student, one of the biggest challenges you will face today is learning how to manage your money. Although exciting, learning to live without the constant support of parents will prove to be particularly difficult for most teenagers and young adults.
That is why building a monthly budget is an important skill to learn. Not only will it help you manage your finances throughout your college years, but it is an essential skill that will be needed throughout your life. And a budget, done properly, will have lasting benefits for you. Good financial habits don’t start after college; they begin now!
Create a Budget: A budget is the most fundamental and most effective financial management tool available to anyone. A monthly budget determines the money that we have available and where that money is going. By distinguishing between the things we “need” and the things we “want” we are able to identify exactly what we are spending our money on. The basics of budgeting are the same for college students as they are for anyone else. Create a personal budget by first tallying your sources of income including wage earnings, scholarships, grants, loans, family contributions, and available savings. Next, document your spending including fixed, variable, and periodic expenses and build a budget with help from an online expense worksheet.
Set a Financial Goal for Yourself: By setting S.M.A.R.T financial goals that are specific, measurable, achievable, rewarding, and timely, whether it is short-term or long-term, we are able to determine how our spending decisions have affected our progress toward our financial goals.
Open a Savings Account: You will need savings, not only for emergencies, but for the expenses you know you are going to have, like that extra book your college professor will assign or repairs for your car that’s out of warranty. You will go broke relying on high interest rate credit card loans to pay for these.
“Small Leaks Can Sink a Big Ship”: Often, it is the little everyday purchases that people make that have the biggest impact on their budgets. It’s important to track your expenses and looking for ways to “cut costs” means more money for those financial goals that we have set or for the things we might “want” in the future.
- Use your student ID for discounts everywhere!
- If you always buy coffee to go, the money that you are spending for coffee everyday will add up. Instead of buying coffee from styrofoam cups, make your own brew at home.
- The same thing applies to eating breakfast – wake up a few minutes earlier than your class and prepare something quick and nutritious to get you through the day.
- Look for textbooks and reference books at discounted prices. Go online and look for sites which offer second hand books at discounted price – they are just as good as the new, more expensive ones.
- Look for the cheapest gas prices in the area.
- Shop in bulk with roommates or dorm mates.
Remember, a degree doesn’t equal sound financial management skills. Creating a budget is a skill that is developed over time and needs continuous effort and discipline, and the time to start is NOW! For additional tips on creating your budget and managing credit, visit www.MoneyManagement.org.
About Money Management International
Money Management International (MMI) is a nonprofit, full-service credit-counseling agency, providing confidential financial guidance, financial education, counseling and debt management assistance to consumers since 1958. MMI helps consumers trim their expenses, develop a spending plan and repay debts. Counseling is available by appointment in branch offices and 24/7 by telephone and Internet. Services are available in English or Spanish. To learn more, call 866-531-0511 or visit www.moneymanagement.org.