The beginning of college can be a whirlwind. And among all the parties, early-morning coffee runs and late-night pizza binges with your suitemates, it can be easy to let something important slip through the cracks: money. But now that you’re settling into a routine on campus, it’s time to take a look at your finances. Whether you’re working your way through college or getting help from the ‘rents, basic money management should start long before you get your first Real World, big-girl paycheck. We talked with Cara Newman of Learnvest.com (a user-friendly website offering women information and advice on personal finance) who shared her top advice on what every savvy college girl needs to know about money.
Make a budget—and stick to it!
The first step to good personal finance is knowing how much money you have—and where you spend it. To make a budget, first write down all of your income sources. Then write down your expenses and split them into “needs” and “wants.” Monthly expenses like rent, food and your phone bill are obviously needs, but other areas (like clothes) are trickier, so be honest. “Something like a winter jacket might be a need, but a sequin dress would be a want,” says Newman.
When you’re figuring out how much you spend on what, you want to be as precise as possible. “It’s hard to make a realistic budget if you don’t know what you’re actually spending,” says Newman. If you aren’t sure, keep a spending journal for a month, writing down every cent you spend. You can also check out websites like Mint.com and Learnvest.com, which have free, user-friendly tools to help you track your spending and budget realistically. Just make sure you have a little wiggle room. “Leave in some room for fun,” says Newman. “Life should be a balance.”
Be cautious with credit
Thanks to the economy, many college students are relying on credit cards more than ever, but a quick fix now can leave you saddled with thousands in debt for years after graduation. According to a study by Sallie Mae, 2008 college seniors graduated with an average of $4,100 in credit card debt—up from $2,900 four years ago.
Newman advises erring on the side of caution when it comes to credit. If you have a fixed income or no income, you might want to stick to cash. But if you have the means, keeping a card for emergencies is a good idea as long as you realize that having nothing to wear for your first date with the cutie down the hall doesn’t count as an emergency. If the convenience of a credit card is what you’re craving, a prepaid credit card or a debit card will give you the ease of plastic without letting you go into debt. Here’s the bottom line: unless you know you can pay the bill each month, a credit card isn’t worth it. “Good credit doesn’t take long to build up; you can do that in about three months,” says Newman. “Unfortunately, it’s all too easy to miss bill payments and get bad credit, which takes a lot longer to get rid of.”
If you do decide a credit card is the right decision, it’s also important to find the right one for you. There are a lot of options out there, so be sure to do your homework before you commit. Learnvest.com recommends keeping these three things at the top of your checklist: the lowest APR you can find (10% or less), a grace period of three weeks, and no annual fee. For more info, check out their credit card finder tool.
Pay attention to the little things
Picking up a bottle of water every day doesn’t seem like a splurge, but it can easily cost you as much as $20 a week, so try carrying a refillable bottle with a built-in filter instead. And you may need that caffeine boost to keep you awake during your 9 a.m. lecture, but switching out your daily caramel macchiato for home-brewed coffee will make a big difference to your bank account. “Little things like that can really add up,” says Newman.
Smart college girls are always looking for ways to save a few bucks. “When I go out to eat, I always order water,” says Megan Leong, a senior at UNC-Chapel Hill. “If you drink soda, drink it at home—it’s cheaper.” Carlene Helble, a senior at James Madison University, saves money by buying in-season produce. “The store usually has a sale on it and it tastes way better than out of season offerings,” she says. “I also stalk the Internet for coupon codes for online shopping. I usually score free shipping!”
Textbooks are always a big expense, but you can cut back by shopping around online, buying used as much as possible, or buying them as you need them instead of all at once at the beginning of the semester. Once you realize how much money you can save with little lifestyle changes like these (and what else you can spend that money on), you’ll never go back. For more tips on how to save money at school, check out this article.
It’s never too early to save
When you’re living off student loans and Ramen noodles, saving money for the future is the last thing on your mind. And sometimes, that’s okay. Saving in college isn’t always practical. If you’re trying to get out of debt, Newman says, that should take priority. But even then, it’s best to be prepared for the unexpected. “As a rule of thumb, you should have an emergency fund with three months worth of money for you to live on—just in case something unexpected happens,” she says.
If you do have an income, it’s never too early to get in the habit of saving. If you bank online, you can set up an account that will automatically transfer money into your savings every week, so you don’t even have to think about it. “Saving money is a great habit,” says Newman. “Even if you only save $5 a week, that’s still better than nothing.”
Sources:
Megan Leong, senior at UNC-Chapel Hill
Carlene Helble, senior at James Madison University
Cara Newman of Learnvest.com
Learnvest.com
Mint.com
Sallie Mae study
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