One of the greatest parts of coming to college is the individual freedom you ascertain. You’re free to choose your class schedule and bedtime; you’re also free to make really poor decisions without your parents breathing down your neck. Financial missteps are common for college students as a part of this newfound freedom. It’s very tempting to blow through every penny that you’ve saved beginning from birth through your Bat Mitzvah. However, it’s thoroughly disappointing when at the end of your freshman year you discover mere nickels in your checking account. As part of the first issue of the personal finance series, this article discusses some money management tips to get you through the remainder of your college years. I like to think that most college students are poor (but rich in spirit!). However, I’m tired of hearing my friends whine about their dire financial situation. Thus, it’s time to trim the fat and shape up your money situation.
First things first, decide how much you have working for you. Once you have a firm grasp on your bank account, begin to organize your finances by reviewing your spending needs and habits. This requires that you track your spending for a specific period of time. Simply record every single penny you spend over the course of the month. It’s really rather frightening when you realize the amount of money you waste. Late night trips to Ratsies really add up. Personally, weekly trips to the mall are the black hole in my budget. From here, estimate your true monthly spending needs and compile a budget. The budget should encompass your monetary goals. My own budget is allocated mostly towards my wardrobe; thus, I forgo other luxuries to compensate accordingly. If you feel like you’re too good to “define your goals,” consider this: A famous Yale study found that the 3% of Yale graduates who had written goals had more wealth years later than the other 97% of the class combined. We’re talking about Yale graduates here. Finally, make a conscious effort to stay within your budget. It may sound ridiculous, but many goals quickly fall through the cracks if you’re not diligent.
Next, actively manage your money and spend it wisely. If you decide that you absolutely must have that flat screen television in your apartment, cutback on your spending the weeks and months leading up to your purchase. Also, take a few days to decide if it is actually worth the cost. Another component of active money management involves paying your bills on time. Take advantage of the email reminder option through online banking as to avoid late fees that can hurt your credit score. Also, avoid hanging out with the richest kids on campus. It’s a real downer when you have to eat pb&j sandwiches for the next three weeks to compensate for all the money you blew during that weekend trip to Atlantic City. Some kids are frivolous with their parent’s credit cards, but you probably don’t have that luxury. Remember, you can do much of what you want, but you can’t do everything you want.
It’s also about time that you considered applying for a job. You have two choices to maintain your current lifestyle, either earn more or spend less. Acquiring an on-campus job will provide you with the necessary spending money to get you through your week, without sacrificing from school or social commitments. Additionally, it’s a good way to build your resume. Future employers value previous work experience. Finally, consider investing your money to lock in greater returns. You can find a good discount broker on a website like sharebuilder.com. Here, you can invest as little money as you want. It’s important for you not to only maintain a balance checking account, but to begin to actually save money for your future. Retirement is only 45 years away.
The prior advice may seem like common sense to some, but a number of students fail to properly manage their money. I’ve even seen business students flounder when it comes to sound financial habits. Managing your money requires the discipline similar to a diet. A budget is a necessary evil; however, if you manage smartly today, it will surely pay off in the future. One day, you’ll look back on your college years filled with Ramen noodles and rail vodka with fondness. You can’t appreciate the light without the darkness.