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College is a very exciting time as students achieve new-found independence, including the chance to live away from home, choose their own friends and after-school activities. Most students depend on their parents for financial help, as well as a part-time job and student loans. This may be your first time handling money on your own, and it's tempting to spend it on coffee, clothes, and spring break trips. However, now is the best time to learn money-management skills that will lead to financial success later on in life.
Money management is a strategic technique used to make money and yield the best value for any amount of it spent. Managing money entails budgeting, banking, investing and paying taxes. To many, frugality is the basis of sound money management. This is not as boring as it sounds, although sticking to a budget means you sometimes have to get creative or come up with new ways of having fun.
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Plan your Budget: The best way to manage money over the course of a semester is by mapping out a budget. List sources of income such as scholarships, loans, money from part-time jobs and allowances from your parents. This list your expenses: tuition, books, clothes and groceries. Include some amount of money in the budget for entertainment or recreation. Keep the amount small, but don't try to do away with it altogether unless absolutely necessary, as you may be tempted to break your budget otherwise.
Open a Checking Account: Having an account of your own at your parents’ bank may allow them to transfer money to you more easily. Many banks offer special accounts for college students including free ATM usage, no monthly fees, no minimum balance, and sometimes interest can be earned on your balance.
Use Credit Cards Sparingly: Credit cards are not necessary, but using them wisely can help you build a good credit history. Use it only for necessities, and pay the balance of completely when you receive your bill. You may also be interested in obtaining a credit card to be used only for emergencies.
Pay all Bills: Pay cell phone bills, car payments, car insurance and rent on time.
Track all your Expenses: Know how you are spending your money. This will help you stick to your budget and easily spot ways you can cut back.
Start Saving: Start small with a set amount of money every week or month. This will help you develop a habit of saving that will stick with you. It is a good idea to save up an emergency fun you can dip into to pay for unplanned expenses like car repairs or replacing a lost item like a computer. Having savings means you can pay for the necessary expense without incurring debt.
Invest: College is an excellent opportunity to further your interests in some way, whether that's participating in a sport, acting in a play or studying abroad. These may incur added expenses, but the long-term outcome makes it worth the money. Choose your activities wisely so you are spending money on those you are really interested in, but not wasting money on something you don't really enjoy. Plan out your expenses and save up for them so they don't catch you by surprise.
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Tips on Saving Money
College students are typically paying large tuition bills and may not be making much income. But there are also a lot of ways you can save money during this time of life.
- Have a spending limit for each week. Pacing yourself with regards to expenses will help you save for future expenses throughout the semester.
- Save a small amount each week if you are expecting to pay for something big in a few months.
- Use credit cards sparingly, charging only for necessities. Credit card companies usually offer to boost up your credit lines so you can charge more, but you can always turn this down.
- Spread out your expenses. Most expenses come at the beginning of the semester, but you may also buy things like books and materials only as they are needed throughout the school year.
- Find other ways to save such as buying books online, buying second-hand, swapping or borrowing items.
- Limit the amount that you spend eating out and going to movies. Instead, rent a movie and watch it with your friends in the dorm. Pop some popcorn or learn to cook some simple meals in your dorm using a microwave or electric grill and invite your friends over.
- While you may want one or two professional outfits for interviews or internships, don't spend too much money on trendy clothing. Chances are you're have little opportunity to wear it after you graduate and you'll instead need money to buy a professional wardrobe. Shop the sales or thrift stores to save on clothing expenses.
- Use your student discounts. Many businesses around the college campus may offer student discounts. You can get discounted movie tickets, meals and cover charge for museums or entertainment establishments.
- Apply for a part-time job as a resident assistant in college. Resident assistants are allowed to live in the dorms at a major discount or possibly even for free in return for their work. Other on-campus jobs are also available to most students.
- Find free ways to entertain yourself, such as using the university library to take out movies or CDs. Go to university sponsored events like open-mic nights, plays, or concerts.
- Eat most of your meals at home or in the dorm by buying groceries and making most meals yourself. Invest in a mini-fridge to store healthy snacks. Making your own sandwiches and salads can be easy and may actually be healthier than ordering pizza or large burgers and fries all the time.
- If your parents live nearby, you can save a lot of money by living with them instead of the dorms. This may not be an option for everyone, but it should be considered if possible.
- If you can't live with your parents or another relative, you also may be able to save money by renting an apartment with a few roommates instead of living in the dorms. Compare the costs, as this may not always be cheaper. Remember when you live at home you can save money by cooking for yourself, but you may spend more money on transportation and utilities.
- Don't own a car. Most universities have everything you need on campus and the local buses are easy to use. Cars require insurance, oil changes, gas and repairs, making them potentially very expensive.
Managing your money well now means that you'll be able to pay off your loans more quickly and stay our of debt. If you have any additional tips on saving money in college, let us know in the comments!
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Photo by Joe Crawford, Wikimedia Commons