As a college student, you could be studying literature, engineering or international relations, but unless it’s a special focus for your major, personal finance might not be on your course list.
Learning how to handle your finances, however, is crucial as you go through college, and it’s likely to be even more important after you graduate. Luckily, the new year offers a chance to hit “refresh” and create new financial habits for yourself.
From creating a budget to repaying student loans, here are seven tips for managing your money like a pro in 2019.
1. Create (and stick to) a budget
One of the golden rules of personal finance is to spend less than you earn. But you can’t follow that guideline if you don’t know how much you’re earning or how much you’re spending.
That’s where a budget can save the day. By tracking your income and expenses, you’ll have a clear sense of your cash flow from month to month.
“Creating a budget is a great way to start the year off on the right path,” said certified financial planner Anna Keisler. “Whether you use an app or a spreadsheet, just make a plan for where your money will go.”
You could use a spreadsheet to record your spending, or download an expense-tracking app to do the legwork for you. By understanding your budget, you’ll gain a greater sense of control over your money, so it doesn’t end up controlling you.
2. Find ways to earn extra spending money
Even though you’re busy with classes and clubs, making time to earn some extra cash could be well worth the effort. If you qualify, try to get a work-study job, whether on or off campus. And if you can’t access work-study, look for any part-time jobs for college students that pay well.
You could also boost your income with a less traditional but nonetheless lucrative side hustle.
“Pick up a side hustle,” suggested MoneyTips CEO Marc Diana. “In addition to building a bigger financial buffer, the more experience you can get before graduation, the easier it will be to get a full-time job afterwards.”
Some side hustle ideas include driving for a ride-sharing service, selling your crafts on Etsy or posting your skills on Fiverr, Upwork or another freelance marketplace. Consider your skills and interests, and get creative about using your talents to earn some extra cash.
3. ‘Pay yourself first’ and build an emergency fund
When you’re in college, you might be feeling social pressure to spend beyond your means. But be careful about splurging if you haven’t built up your savings account.
“Students want to get into the habit of ‘paying themselves first,’” said certified financial planner Devone McLeod. “Treat saving as if it is a bill and put those allocated funds away first. Treating savings as a priority instead of an afterthought results in putting a lot more money away.”
Building your savings will provide a cushion for any unexpected expenses. You never know what life will throw at you, so protect yourself financially by funneling money into an emergency fund.
Hopefully, you won’t have to touch that rainy day account, but you’ll feel better knowing it’s there, just in case.
4. Don’t waste student loan money on non-essentials
Student loans can be a useful tool for covering tuition and other college costs, but you should avoid borrowing more than you need. Some college students spend part of their loan money on clothing or entertainment, but this can be a very bad idea.
If you’re using student loan money for non-essentials, you could come to regret it after graduation when those first student loan bills kick in. Not only will you have higher monthly payments, but your larger debt balance will accumulate serious interest.
So be intentional about how much debt you take on, and avoid spending student loans on vacations or fancy restaurants. If you find you took out more student loans than you need, return the money so you don’t end up paying interest on it.
5. Use credit cards responsibly (but avoid credit card debt like the plague)
It takes time to build good credit, so starting while you’re a college student could help you in the future. Your credit score depends on a few factors, including the age of your accounts and your history of repayment.
By opening a credit card account, you could establish your credit history with on-time payments. But you’ll have to be careful not to spend more than you can afford to pay off each month, or else you could end up with high-interest credit card debt that’s hard to pay off.
You might look for credit cards designed for students, which typically don’t require you to have significant credit history and often don’t come with annual fees. Some also offer rewards, such as cash back on your everyday spending.
But again, avoid charging too many transactions to your credit card, or you could end up accruing debt and damaging your credit score instead of boosting it.
6. Consider making interest-only payments on your student loans
Along with being mindful about how much you borrow in student loans, consider starting repayment before your grace period is up. Even though you don’t have to start repaying your student loans until six months after you graduate, starting early could cut away at interest.
Unless you have subsidized loans, your balance will be quietly collecting interest while you’re in school. Then you’ll be facing a bigger debt after you graduate than what you initially borrowed.
If you can swing small payments while in school, perhaps enough to cover interest, you’ll have an easier time paying back your debt after you graduate.
7. Come up with a plan for conquering your student debt
Along with making small payments toward your student loans while still in school, take advantage of your grace period to come up with a plan for your student debt. Start by writing down the details of each loan, including how much you borrowed, your interest rates and your loan servicers.
Find out what your future monthly payments will be, and familiarize yourself with the repayment plans available to you. Federal loans, for instance, come with a variety of options, including the standard 10-year plan, income-driven repayment and extended repayment.
Private student loans don’t usually have as much flexibility, but you can refinance for new terms and lower rates once you have strong enough credit and income (or can apply with a cosigner who does).
By exploring all of your options for repayment, you’ll be ready to hit the ground running once your grace period ends and repayment kicks in.
Mastering the basics now will help you after graduation
As a student, your main focus is studying for your degree and discovering your passions. But even though you’re not working full-time yet, it’s still important to master the fundamentals of personal finance.
College is a great time to start building credit, which could make life easier after you graduate. Plus, you can practice following a budget, building an emergency fund and boosting your income with a side hustle.
And if you’ve borrowed student loans, take time to prepare for repayment. That way, you’ll be ready to manage your debt without it becoming too much of a burden.
By laying the groundwork now, you’ll set yourself up for a more financially secure future.
Want to earn extra money?Here are the best side hustle opportunities!
|Company||Type of Work||Requirements|
|Ridesharing||Car and smartphone|
|Rent out your car||Own a vehicle|
|Rent out space||Room to host guests|