Young people often get their first real taste of adulthood at college. This is their first chance to plan their own schedule, choose their own academic pursuits, do their own laundry, and manage their own finances. Indeed, with college costs rising and the nature of work after college changing, students need to know how to manage their money and stick to a budget while in school.
Student should work with their financial supporters to determine who is paying for college and how. Families and other supporters should have a conversation before the start of each school year to decide who will pay for costs out-of-pocket, if the student needs to get a job, and how much financial aid can help with student spending.
Students should consider opening a free or low-cost checking account at a local bank, especially one that offers student discounts and other incentives. A joint bank account with financial supporters will allow the guardians to monitor the student’s spending and add extra funds if needed. Students should avoid taking out credit cards during college—even if the credit card promoters are giving away free t-shirts and posters—as sinking into credit card debt at a young age is one of the surest ways to harm one’s financial future. Credit cards for emergency uses and to prudently build credit scores can be appropriate, but only when the credit card is subject to predetermined rules and closely monitored.
To open a First Bank Student Checking Account online, click here.
Students should also consider what college costs are likely to arise, make a budget to account for them, and work to save money wherever possible.
Click to hear a video of some of the best ways to save for college.
Some of the most common college costs and savings ideas include:
Housing – Students should consider the price of on-campus dorms versus off-campus housing. In some schools on-campus is clearly cheaper while in other schools off-campus is the way to go. Careful research of relative prices is key. Also, students should consider the value of roommates. Sharing living space may be frustrating at times, but it is also one of the easiest ways to cut costs.
Textbooks – Renting textbooks will save students money. If renting is not an option, students can often find used copies rather than buying brand new. Of course, students should also check out their campus library, which may lend a textbook to a student for free.
Transportation – Owning a car on campus can be convenient, but it can also be costly. Most universities have a bus system students can use in addition to a city’s public transportation system. If a student really needs something to ride around town, consider bikes or motorized scooters, both of which are far cheaper and easier to park on campus.
Food – Campus meal plans are often the cheapest and easiest way to pay for food in college. With the right plan, the price of food drops below a couple of dollars per meal. If students are going to cook off campus, consider cooking in groups and rotating cooking and cleaning responsibilities. Cooking for three or four people is just as easy as cooking for one and can be much cheaper. Eating out should be a relatively rare treat and students would do well to find eating establishments that offer student discounts. And it almost goes without saying, but if a student needs a cup of coffee every day to get going, he or she should brew coffee at home. Nothing will kill a budget faster than a college student spending $5 or more at high-end coffee houses every morning.
The Fun Fund – College life should include fun and not just studying. Students are going to go out occasionally, but when they do they should make sure they are not spending money they need for more important things. Students should set aside a few dollars here and there to use for a night out, and put it in a savings account separate from their day-to-day checking account. Students should limit the use of credit cards when going out, and consider using only their First Bank Debit Mastercard®, Digital Wallet, or cash. This will ensure they only spend as much as they can afford.
Students who build and stick to a good financial plan while in college will be on track to accept financial responsibility after graduation. Learning to build and maintain a budget is an important part of college students’ larger education that will serve them well for the rest of their lives.
First Bank Wealth Management is here to help you and your student navigate how to pay for college. For college planning 101, schedule an appointment with the team at First Bank Wealth Management.
By: David Frederick
|David Frederick, J.D., LL.M. is the Senior Vice President and Director of Client Success and Advice at First Bank Wealth Management and Adjunct Professor of Economics at Washington University. David may be reached by phone at 314-995-8764 or via email at [email protected].|