College is often the first time young people experience financial independence and fiscal responsibility. Learning how to effectively manage money, stay within a budget and spend within limits can set the stage for long-term financial health and independence as an adult. It can also prompt the start of good savings habits, which can be beneficial later in life.
Establish Financial Expectations
Most college students are at least partially financially reliant on their parents or their families as they continue their educations. Establish guidelines with your parents about financial expectations while in college. For example, some parents want college students to get part-time jobs to help support themselves, while others offer to continue an allowance-type situation to allow college students to focus exclusively on their studies. Whatever way your family decides to progress, sit down and have a conversation about who will be responsible for what bills during the duration of college.
Many college-related costs are set expenses. For example, tuition, fees and on-campus housing are usually grouped into set prices for a semester. Anticipate other expenses that fall outside this category. For example, consider necessary expenditures beyond the set fees, such as the costs for doing laundry, securing tutors or participating in on-campus activities, clubs and organizations. This gives you a broader understanding of what your total financial needs will be.
Whether your parents are paying for college, you have scholarships, or you’re applying for loans and financial aid, be involved in the application process and paperwork generation so you understand your expenses, finances and repayment obligations. Not only does this help you grasp your responsibilities, it also gives you a good understanding about the costs and value of continuing education.
Make a Budget
Create a budget that includes all the expenses you're likely to incur as a college student. Include things like personal hygiene needs, gas money, food and entertainment, clothing, medical care and living expenses not covered through on-campus housing. The budget should be specific and broken down into weekly or monthly increments to help you better manage your finances. Differentiate between “necessary” costs and extra expenditures so you know where to cut back if for any reason you go over budget. For example, ordering pizza every Friday night is fun, but not required, whereas paying for your car insurance is a necessity.
Live Within Your Means
A lot of the lessons learned on college campuses are nonacademic and relate to life in the real world. As an exercise in financial responsibility, force yourself to live within your means. For example, if you have a $300 quarterly entertainment budget, and you buy $200 concert tickets during the first week, be mature enough to forgo most other activities for the rest of the period. Don't ask your parents for a bailout for financial missteps you make on your own. Instead, learn from them and figure out how to better manage your spending in the future.