College Money 101

Taking care of your money is basically taking care of yourself. Not only do you need money during college but you also need money to launch a life after college. Your mom probably won't give you an allowance that can cover all that. So how do you give yourself a bigger allowance?

Money 101

Do you know someone on a limited income who always seems to have enough to go around? Chances are very good this person knows at least some of these not-so-secret pillars of money management:

  • Budgeting
  • Credit discipline
  • Online banking
  • Regular saving
  • Smart spending
  • Tax savvy
  • Reliable income

A Budget Puts Money in Your Pocket

"Budget" is not the most exciting word. How about calling it a "personal spending plan?" Such a plan puts you in charge of where your money goes and helps you make smart spending decisions. For example, eliminating a daily $4 latte could put over $100 in your pocket each month!

Start your plan by figuring what you must spend every month. Then figure what you want to spend. Rent is in the "must" column. Lattes are in the "want" column. Then subtract the "must" total from your income (aid, allowance, job, savings, etc.). The amount leftover is what you can spend on your "want" list. If it's not nearly enough, adjust your spending and/or your income. This becomes your personal spending plan. For more specific help with budgeting read CollegeData's article Stay Afloat Financially at College.

A Little Credit Goes a Long Way

Credit gets a bad rap in student circles because it is misused by many students. But used wisely, credit can be invaluable. If you are spending within your budget, you are better off using credit to make planned purchases that you will pay off in short order. It can bail you out in an emergency. Plus, a little credit history can help you land an apartment or help you buy a car.

For everyday spending, use cash, checks, or a debit card (a card which subtracts money from your checking account right away). But a low-limit credit card with zero fees can be a nice addition to your spending arsenal. For more about how credit cards work, see CollegeData's article Credit Card Basics.

Online Banking Keeps It Simple

If you have a checking or savings account, chances are you can see your account online. A big benefit is seeing your balance at any time, thus avoiding overdraft charges. Also, you can move money easily between savings and checking accounts. If you don't have online banking now, find a no-fee or low-fee bank and open an account. Our article Banking Options can get you started.

Regular Savings? Who's Kidding?

One of the big advantages of being young is having time on your side. If you get in the habit of saving now, you stand a chance of multiplying your money many times over. Plus, saving is an excellent lifetime habit. One rule of thumb is to save ten percent of your income. But any amount set aside regularly will add up to a very pleasant amount. It may help to have a tangible goal, like a new computer.

Smart Spending

There are a million ways to stretch your precious dollars. For example, having fun does not have to be expensive. There's picnicking, biking, matinees, discounted rehearsal performances, and lots more cheap fun. On the other hand, buying something impulsively—even at 50% off—means you still must pay for it, often with money you don't have. Check out CollegeData's article How to Stretch Your College Dough for more smart spending tips.

Tax Savvy

Did you know that parts of scholarships and financial aid may be taxable? Or that you might need to pay taxes even if you are just doing some tutoring? These are just some of the tax implications of being a student. You will save yourself a lot of headache if you learn the basics of federal tax returns. Ask someone who knows their way around a tax form to teach you the tax return ropes.

Reliable Income

It may seem a little silly to state the obvious. Who doesn't want a reliable income? But many students view loan payments, aid disbursements, and parental allowances as cash windfalls. Actually, this money is your income. Spending it should be spread out according to your budget. And if it is not quite reliable enough, supplement it with part-time work, such as babysitting or tutoring. Knowing that you can cover all your expenses and still have some money leftover will give you peace of mind—and that can only help your studies.

Learning to nurture your finances is like learning to ride a bike. The more you do it, the more it becomes second nature. Sure, you may have a few spills and scrapes along the way. The secret is getting back on the seat again and again. Pretty soon you'll find yourself navigating the potholes and breezing along the road to a well-funded life.

Information in this article is of a general nature. It is provided by COLLEGEdata for educational purposes only and may not apply to you or your situation. Please consult a financial or legal advisor before acting on such information. COLLEGEdata is a service of 1st Financial Bank USA, a provider of financial services.

For Students Age 18 and Older

Have you received a Personal Invitation to apply for a Student Credit card?

Learn how to qualify for a Personal Invitation to apply for a Student Credit Card

1st Financial Bank believes students who pick colleges wisely will also want to learn how to use credit cards wisely.

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