How not to go broke while you’re in college and come out ahead
Living with a budget that has you ‘just’ surviving between work, study, PB&J, and Ramen?
It is enough to make you wonder where the endless adventures and good times that the colleges of Hollywood promised.
Never fear, with a few small changes, you’ll be surprised how fast you can get off those Ramen packs.
We’re going to show you how easy cutting your spending can be when you take a good, hard look at exactly where your money goes.
Let’s begin…
Step 1: Keep track of your income
Whether you have a regular part-time job, you have grants for your education, or you just pick up a few bucks here and there doing odd jobs when you have time, keep track of every penny you make before you spend it.
Not only will that make it easier not to spend money you don’t have, over time it will also help you track your earnings and build up a picture of how your income changes while you’re in college.
By the time you graduate, you’ll have a good sense of how much money you need to earn to maintain the lifestyle you like. That knowledge will be invaluable when you’re trying to choose a job.
Step 2: Record and categorize your expenses
Certain things are essential, and you’ll have to accept spending money on them. Food, toiletries, and any bills you are responsible for while you’re in college are all things that have to be paid for.
By keeping track of every time you spend money on an essential, you can work out the minimum you need to earn each month to stay afloat.
Then there are things you enjoy, but can do without if you have to, such as new clothes, meals out, and entertainment like going to the movies.
You shouldn’t feel guilty about spending money on indulgences, but only if it’s not threatening you to cushion troll just to survive college.
Should you…
Lose the Latte
You may love picking up a latte, energy drink, or other beverage on your way into work or school each morning, but do you really need it?
A Grande Vanilla Latte from Starbucks averages $4.67. If you bought one of these every weekday for 18 weeks a semester, it would add up to over $826 a year! Think of what else you could do with an extra $800!
Home-brewed coffee probably does the same job in waking you up, and if you learn to make your perfect cup at home, it may even become your preference.
Put the water back
Bottled water is another example of an extra expense.
You may recall your parents whining about gas prices in the late 00’s when it was over $4.00 a gallon. But, if you buy bottled water at an average price of $1.59 per 16-20 oz. size, you are spending over $12.00 a gallon for something that comes virtually free from the tap.
Instead, filter your own and keep it in a reusable bottle. You may even be helping the environment by cutting down on the massive amount of plastic discarded every day.
Pack a lunch
If you are pulling at least one meal a day through a window, you are probably spending much more than necessary.
It can be tempting with the spread of dollar menus and Groupons to assume it is cheaper. Plus, it is quicker and easier, so it is very easy to justify – add to that the feeling of “I deserve this,” and your budget is in danger.
Packing a lunch from home, before you rush out the door to class, is a much cheaper alternative and probably proves to be a healthier lifestyle in the long run. It will allow you to sock away an extra $10 per week while saving you from the scourge of the “Freshman 10”. Win-win.
Get on the bandwagon or at least a bus
Hopping in your car, commuting to campus, and parking is the normal routine for thousands of students.
If you took public transportation, carpooled, or used university transit instead, you’d save daily money on gas and parking fees, not to mention wear and tear on your vehicle.
It also lets you relax, read, or catch up on your studying during your commute time.
Live close to campus? Why not ride your bike, get some exercise, and ditch parking woes and gas expenses all together?
It could even help you get from class to class more efficiently as most campuses have bike racks much closer than parking lots to your destination building.
Memberships are costly
You had great goals when you joined the gym, but how often do you really use your membership?
Many campuses have gyms for which you are already paying and will provide you access. Even better, many have trainers available for free in the form of fellow students who are working on degrees in Physiology, Kinesiology, or PE.
While we are looking at memberships, let’s look at a few others as well.
Things like Hulu, Pandora, Spotify, Netflix, BirchBox and more all seem harmless but add up those 9.99 fees and they really start to drive a wedge through your best intentions.
Take a hard look at any memberships you have to make sure you are actually benefiting from them. If not, cancel them and save!
Unplug It
If you live off campus you control some of your biggest monthly expenses. “Vampire Gadgets” may be sucking your budget dry.
These are devices that continue to drain electricity even when they are turned off.
Electronics like phone chargers, microwaves, televisions, and computers use energy all the time.
The solution is simple: unplug them completely from the wall when you’re not using them. This can save up to 10% on your electric bill and is a good environmental practice in saving electricity.
Step 3: Have a plan and stick to it
Tracking your income and expenses builds an overall financial picture of your time in college, and allows you to plan accordingly.
Eliminate luxuries and put a certain amount of money away each month to help you survive.
Your financial situation will change as you go through college, but starting each month or each semester with a plan you can follow means that you can spot in advance where you might run into trouble and adjust accordingly.
Somethings you should keep in mind when making your plan:
Suggestion #1: Know what you’re monthly student loan bill is going to be
You can’t adequately plan if you don’t know what you’re going to owe once the grace period for your student loans ends. Make sure you know what your monthly bill is going to be! There are numerous student loan calculators on the web. Do this as soon as your last semester starts.
Suggestion #2: Set aside as much money as you can
Should you not be able to land a job immediately after college, set aside as much money as you can so you can make your student loan payments when they start.
If your family gives you a few bucks for graduation, don’t spend it. Save every penny.
It takes many college graduates up to six months to find a job after they graduate (if not longer).
Prepare for this just in case it takes you a bit of time, too.
Suggestion #3: Apply for jobs well before graduation
Some employers need a few months to process applications.
It’s not uncommon not to hear from a company for a few months after you submit an application (and if it’s a government job, as long as six months).
Start looking and applying for jobs immediately after winter break so you’re not left waiting for something to happen after you graduate.
Suggestion #4: Start fixing up your apartment so you get all of your security deposit back
If you’re renting an apartment, do everything you can to ensure the apartment is exactly how it was when you got it.
College landlords are notorious for nickel and diming college graduates out of their security deposits.
Start cleaning and repairing small dings now. A trip here and there to the dump or Goodwill now when you have the time is probably a good idea, too.
Suggestion #5: Research student loan repayment plans
It’s good to know what your repayment options are for your student loans.
If you can’t find any literature on it, don’t be afraid to make an appointment with someone at your school or your lender to discuss all of your options.
Paying off your debt aggressively is good when you can afford to, but you don’t want to be cash strapped in the beginning.
Suggestion #6: Pay off small debts
If you took out a credit card to start building your credit, that was a good idea; however, if you didn’t pay it off each month, you’ll want to do so before you have even more bills to worry about.
Suggestion #7: Take an online budget course
It’s surprising how many college graduates are unprepared for the real cost of living. Most people learn through trial and error, which is unnecessary.
There are many free courses online you can take as well as videos on YouTube you can watch that can adequately prepare you.
Step 4: Make the smart decision about getting a credit card
For many people, college is the first time they’re truly independent financially.
Even if you are going to college and rely on your parents for financial support, the actual spending and managing of that money will fall on you.
Pros:
1. Credit cards are great for emergencies
One of the best things about a credit card at any age is that it works in an emergency situation.
You may not always carry a lot of cash on you, or even have much in your bank account to use a debit card for, so a credit card can be a huge help in an emergency. If you plan on studying abroad, this is especially true.
You never know when you may need to buy a meal, book a hotel, or make a big textbook payment that you’re not expecting and don’t have money on hand for.
2. It will help you establish credit history
Coming out of college with a credit history – a good one – is one of the best things you can do for yourself.
Building up credit will make it easier to get future loans, take out a mortgage, or get another credit card with great rates.
The earlier you start building this history, the better.
3. It allows you to develop money management skills
Having a credit card forces you to learn how to make payments and monitor your spending.
These money management skills will be important for the rest of your life, so it’s good to start on them now. It will also teach you about paying bills, late fee penalties, and monitoring bills for fraud.
If you’re worried about forgetting to pay your bill, you can set up automatic bill pay from checking account if your bank offers that option.
Cons:
1. It could lead to a low credit score
If you’re not yet responsible enough to stay on top of payments, which many college students may not be, having a credit card could leave you with a bad credit score before you even graduate.
If you know that you can’t keep up on payments, you might be doing yourself more harm than good by getting one.
2. Credit cards have interest rates
Though it is usually low, credit cards do come with interest rates. For a college student, even this small amount could be a big deal.
3. They make saving hard to learn
Though having a credit card will teach you all about credit, paying bills, and managing money, it doesn’t teach you much about saving up and can make it hard to track your spending.
With a debit card or savings account, you have to be diligent about saving and spending, whereas with a credit card, it’s easy to overspend and never really pay attention to your savings.
Step 5: Open a checking and savings account that works for you
The more you put away as a student, the less debt you’ll have when you graduate.
At many colleges, a student ID is already tied to a Heritage Bank eChecking account in what’s called the College Green Accounts program.
This provides a way for many students receive their financial aid money easily and efficiently. If you attend a college that utilizes Heritage Bank’s CGA program, be sure you’re taking full advantage of the account and other resources provided to you.
Whether you use Heritage Bank or not, whether you already have a bank account on your own or with your parents, make sure that your account is working for you.
1. Fees
Attending a university or college includes more hidden fees than you can count; you don’t need that from your bank, too.
The bank you choose should be upfront and clear about any charges going in.
Many banks offer a free checking account for students, but some have a monthly or even a yearly charge.
Also, watch out for hidden transaction fees or ATM fees—those add up fast.
2. Availability
Have you needed to check your balance in line at the store?
Have you been traveling and needed to transfer money from your savings account?
Have you needed to talk to customer service at midnight on a Saturday?
Your banking partner should be there for you 24/7 online and by phone.
3. Easy
Ask yourself a few questions while shopping around for a bank. How easy is it for you to deposit money into your account? For your family to deposit money into your account?
Are there ATMs that work with your bank at your school? Can you use it at student events, the cafeteria and at sporting events?
Making sure you eliminate those obstacles before signing up can save you a lot of headache in the future.
4. The Future
You won’t be in college forever.
Student accounts often come with some great perks, like rewards points, but they don’t always last after graduation.
Some banks exchange student accounts for more traditional accounts once you stop being a student, which can lead to all kinds of hassle if the regular checking accounts don’t fit your needs.
Getting a bank account is like starting a relationship and the longer you have one, the better it is.
Try to find a student account that will outlasts your student status.
Last step: make sure you enjoy the ride
You only get to have one college experience.
It’s smart to prepare, just like it’s smart to work on a term paper well before the day it’s due; however, just like you don’t have to spend every waking moment studying, you don’t need to obsess over life after graduation.
Make sure you allow yourself to still have fun and forge those lifelong friendships!
