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4 Banking and Budgeting Tips for College Students

By: American Heritage08.19.21
Education
Advice
Three college students talk in a library while holding books

Going to college is a big step. You’re able to stretch your legs and develop the skills you need to be independent once you graduate. One of the most important skills you’ll need to learn isn’t taught in the classroom: how to manage your finances in college.

Here are a few key tips to help you learn how to save money in college, build a solid budget, and help keep your checking account growing rather than shrinking each month.

 

1. Create a Budget

Setting a budget helps you build your savings more aggressively and makes it less likely that you’ll run out of money right when you’re trying to buy plane tickets to go home for the holidays. The goal is to spend less than you’re bringing in each month.

Begin by considering your wants vs. your needs.

As a student, it’s rare that you’ll have an endless stream of money flowing into your bank account. Instead, you’ll have to focus on living on a budget and find creative ways to stretch each dollar you have.

Start by looking at each purchase and decide if it’s something you want or something you need. Be honest with yourself when you’re asking these questions. For example, declaring something like a new television a need instead of a want doesn’t make it true. However, true necessities like your cell phone, food, snacks, clothing, laptop, and other essentials are things you should prioritize spending money on.

Next, find a budget that fits your specific financial situation in college. Maybe you’re studying full-time while receiving financial support from your family or through grants and scholarships. Maybe you’re working while in school. There are several budget options you can choose from, and you might want to experiment to see what works best for you and your income stream. Here are two popular options.

 

  • The 50/30/20 Budget: This method breaks your monthly income into three main categories: 50% of your earnings goes toward your necessities (rent, health insurance, groceries, etc.), 30% goes toward the things you want and the remaining 20% goes toward your savings. Just make sure to open a student savings account to keep your savings separate from your day-to-day funds.
  • Pay-Yourself-First Budget: This system prioritizes savings over expenses, so you effectively pay yourself first. To use this method, set a savings goal each month and set aside the money you need to reach that goal. The money you have left over should go toward your necessities and wants as you see fit.

Whatever method you choose, do your best to stick with it. This way, you’ll always have enough money to cover your expenses and can adjust your spending accordingly.

 

2. Keep Track of Your Spending

It’s easy to spend more than you mean to when you’re not keeping track of your purchases. Rather than leaving it up to chance, start tracking your spending from day one.

Take advantage of digital money management tools to help you create budgets and track your spending in real time. Here at American Heritage, our members can use My Money Manager in our Online Teller and mobile app to plan and control virtually every area of their finances, quickly and easily.

Speaking of online tools… consider taking advantage of our Online Bill Payer to take the hassle out of paying bills, and use our Card Controls tool in our Mobile Teller App to manage and protect your debit card, right from your phone. After all, spending less time on your finances lets you enjoy more of your time in college.

If you’re the type of person that likes to work with physical trackers and lists, all you have to do is grab a notebook and write down each purchase you make. Note the store you went to, the amount you paid, and the date you made the purchase. This will give you a good visual of where your money is going and can help you better curb your spending as needed.

 

3. Start Building Your Credit Score While in School

Your credit score doesn’t just help you get loans or open credit cards with your bank or credit union. It can also help you get an apartment after graduation and even snag that great job you’ve been dreaming about.

Rather than leaving things up to chance, start building your credit while you’re in school. Open a student credit card and use it carefully. Only charge purchases that you can afford to repay in full at the end of the month. Or get in the habit of paying your card balance multiple times each month.

This will help you establish a credit history and can strengthen your score by the time you graduate. Not sure where to start? Consider applying for a secured credit card at American Heritage Credit Union for an easy way to start building your credit.

 

4. Use Student Loan Money as Intended

If you’re paying for school with a student loan, it’s tempting to use some of that money that’s disbursed directly to you to cover the cost of nice-to-have luxuries rather than focusing on paying just for the essentials. Don’t. Make sure you use your student loans for college-related expenses only. This means costs like:

 

  • Tuition
  • Room and board
  • Rent
  • Transportation
  • Groceries
  • Textbooks
  • Lab and administrative fees
  • School-sponsored health insurance

This isn’t to say you can’t spend money on fun, non-academic things like a new beanbag chair for your dorm room or a barbecue grill for your shared yard. But financial aid shouldn’t go toward these.

Remember, every dollar you borrow comes with interest. Six months after you graduate (for most federal loans), you’ll have to start making payments on those loans. The more you borrow, the more you’ll have to pay back.

If your federal student loans exceed the amount you actually need, you have the opportunity to cancel part of the loan, which lets you avoid paying interest on extra funds you don’t need.

 

Partner With the Right Financial Institution

Cramming for your exams can be stressful, but managing your money in college shouldn’t be. Partner with a credit union that will help you every step of the way. Check out AmericanHeritageU for more tips to help you take control of your finances and start learning how to make smart money moves now. And if you’re not a member already, join today!

 

 

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