Setting out on your own and heading to college is a big moment in your life. For most young adults, it will be the first time you’re entirely responsible for your own money – and managing your finances during college can quickly become a challenge. There are so many aspects to consider, from tuition fees to grocery shopping – plus, you need to find some cash for social activities so that you can truly enjoy the full college experience.
As a result, many students tend to slip into bad financial habits during their college years, relying on their overdrafts or running out of money at the end of the month. In some cases, this can’t be avoided – but implementing good financial planning tips can reduce the chances of this happening as much as possible.
In this post, we explore exactly why it’s important to stay on top of your finances during college.
Keep your debt to a minimum
When you’re in the college bubble, debt can seem like something that you’ll worry about later down the line. Whilst that’s technically true, it will catch up with you pretty fast once you graduate and start having to pay off your loans, or want to purchase your first home. Although student loan repayments don’t harm your credit rating, any extra money that you may have borrowed on credit cards or buy now, pay later schemes will do, potentially causing you issues in the future.
Plus, if you graduate with a lot of extra debt, it will take you longer to become debt-free, reducing your disposable income for other things. Very few people graduate from college without owing anything, but if you can stick to your college budget, you’ll be grateful for it in the future.
Learn skills for the future
In many ways, college is a stepping stone between living at home and being completely out on your own. You’ll have the support of your chosen institution to lean on, and your parents may have saved some money for you to help with tuition. However, you also need to be responsible and accountable for your own choices.
College is a great opportunity to get into good financial habits such as budgeting, with the safety net of your support network behind you. That way, when you head out into your first job, these tasks will feel like second nature, rather than overwhelming. You can also learn about yourself during this time – do you tend to leave bills until the last minute, or spend all your money as soon as your loan payment comes in? If you lean towards bad habits, you can put safeguards in place to reduce the impact of these in the future.
Provide study-life balance
College isn’t just about studying, although that is of course important. It’s a chance for you to expand your horizons, meet new people, hear different perspectives, and try new things. When you’re on a tight college budget, it can sometimes feel hard to say yes to social plans, especially if you’re not sure how much they’ll end up costing.
But staying in your room for the whole of the semester may leave you feeling resentful and won’t allow you to get the most out of your college experience. Alternatively, having to work lots of hours on top of your study commitments can also leave you feeling unbalanced and frustrated.
Staying on top of your finances during college and building a ‘fun fund’ into your college budget can mean you find it easier to say ‘yes’ when social opportunities arise. That doesn’t mean you have to go to everything – you still need to be mindful of overspending – but having even a small amount of dedicated funds can help you stay out of debt and have a good time. Fortunately, many college students are in the same financial situation, so there should be plenty of free or low-cost activities to keep you occupied on campus.
Expand your horizons
The idea of staying on top of your finances during college can initially feel too restrictive, but the truth is that sticking to a budget can help you both now and in the future. Understanding your spending can mean you graduate with minimum debt and can get the most out of your college education.
