Personal Finance

Financial Tips for Students Entering College

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Last updated on July 23, 2019 Comments: 15

Seventeen years ago I was nervous about what was about to transpire. At this time, although I had been away from home for extended periods of time, I was about to leave for college. Honestly, I thought I might not have been able to handle the responsibilities and the new social environment. Rather than living at home and attending a local college like a number of my high school classmates, I was preparing to live on the campus of a major university in another state.

I should have known that I had little to worry about. But there are a few things I wish I had known — or at least thought about — before entering college.

Pay attention to your expenses. For me, my expenses were fairly controlled. On campus, I had a meal plan. My breakfasts, lunches and dinners were paid for in advance and rolled into my tuition and board expenses. In order to eat in one of the many dining halls, all I had to do was flash my student identification card. This meal plan entitled me to a certain number of meals per week in addition to an allotment of “points” which could be used to purchase snacks at other times.

The meals and points expired at the end of each semester, and the college reminded students that “it is responsibility to budget points over the course of the semester/session.” I don’t recall doing any budgeting. I may have known at the time how many meals and points were available to me, but I didn’t do any planning. I ate when I felt like it and bought snacks and other things at the university’s shops when I desired. There was an option to add points to the account, and I’m sure I did this as needed.

Who is paying for college? My undergraduate education was paid for by my parents, a partial scholarship, and loans in my name. While you should not waste your time by failing any courses, this is even more important if your parents or other parties are paying for your education. Wasting your money is a problem, but wasting other people’s money is disrespectful. If you fail a class required for your degree, you will have to take that class again, paying for it twice. It’s not worth it, particularly since it’s usually difficult to outright fail a class. Paying for college yourself supposedly gives you ownership of your academic decisions while in school, but if you’re in a situation where you don’t have to worry about affording your own tuition, then consider yourself lucky.

Work shouldn’t interfere with studies. I am quite grateful I didn’t have to pay for most of my undergraduate education. It allowed me to focus on my education and extracurricular resume-building activities in my field rather than focusing on earning income to afford tuition. I did find a few jobs, however. I stayed on campus for winter and summer sessions to take more classes, but with a lighter load during these in-between semesters, I worked in the department library to earn some extra money. I also served as a web consultant in my department, designing their first departmental web site and teaching professors how to publish their own sites for a measly ten dollars an hour.

These jobs provided me with a little extra cash. I probably spent it just as fast as I was earning it, however.

Have the right bank accounts. It’s essential to establish bank accounts in your name. Free student checking accounts can help you access your money whether at home or at school, and an account that has branches nearby to both locations is one way to ensure your parents can add to your account easily if they are willing to do so. College is a great opportunity to get into positive financial habits early, like moving extra money from your checking account to a high-yield online savings account at regular intervals. This is a great destination for any extra cash you earn from odd jobs, though in college there will always be the temptation to spend money on enhancing the social aspect of the college experience.

Open a Roth IRA. I wish I had known about Roth IRAs when I started college. It would have been impossible for me to do so without a crystal ball or some other form of premonition. These retirement accounts were brought into existence while I was enrolled in the university, but I did not hear of it until a few years after I had graduated. If I had known that I could put money away for retirement in a tax-advantaged account while I was in such a low tax bracket, I might have taken advantage of the opportunity. Then again, I might not have. It’s hard to imagine retirement before you’ve officially begun a career, but it’s harder to argue with long-term investing in the stock market. If I had invested $1,000 in the S&P 500 index on October 11, 1996, it would be worth $1,825 now (not including reinvested dividends) and much more by the time I retire.

Like many, I played the “stock market game” in elementary school, learning how investing works in some respects by using fake accounts to trade. Of course, trading was a different worls when I was young, in which stock market information like prices were only available in newspaper listings. By the time I entered college, I probably knew only a little more about investing, but my interests lay elsewhere. I did not concern myself with the idea of having a secure financial future.

Avoid credit cards. The credit card companies are vultures on college campuses. I remember when I first arrived on campus as a freshman for orientation, one week before the upperclassmen. The companies set tables outside the dorms with applications and free tee-shirts, enticing subfashionable freshmen like myself to sign up. Although I escaped relatively unscathed, having a credit card without a job is asking for trouble. The Credit CARD Act limits card issuers’ abilities to market to students, but the sharks are still out there.

One particularly sneaky aspect of college-geared credit cards is the introductory offer. The 0% APR on purchases deal sounds great, but what they don’t explain is that you must pay off your entire balance on the card before the promotional period ends, otherwise you could owe back interest as if the 0% APR promotion never existed. It’s always explained in the fine print, but if you have an appointment for orientation, chances are you just want to sign the form and grab the tee-shirt.

Forbes offers these thirteen financial tips for students entering college for the first time.

  • Use credit cards sparingly
  • Pay all credit card balances in full
  • Get the best deal on a checking account
  • Start saving
  • Keep track of your spending
  • Set a limit on entertainment
  • Shop at second-hand stores
  • Keep an eye out for free money
  • Get a part-time job with tips
  • Walk or ride a bike — don’t drive
  • Avoid the tax on stupidity
  • Look for student discounts
  • Don’t eat out all the time

Tavis Smiley has a number of similar suggestions. He suggests making a budget, shopping smart, and learning to cook.

Had I known what I know now about compounding interest and the tendency for the stock market to increase over time, not just theoretically but from experience, I’d be in a better financial position right now. And it’s not about having more money, it’s about having more options for doing the things I like to do.

From a psychological standpoint, it’s unlikely that college students, even after receiving information about making healthy financial choices, will change behavior. That’s just a nature of age. When I was entering college, while I felt like an adult, perhaps subconsciously I knew that I had a few years remaining before I needed to concern myself with adult issues. I wasn’t concerned with retirement because I figured there would be enough time after earning my degree to worry about the future. In many respects, this is true. In college, it’s good to hang on to the last few years of childhood and limited responsibilities. While my finances would have been in better shape earlier on, it’s hard to look back at my life and wish I had taken a different approach.

After all, my financial failings in and after college led to my interest in personal finance, and not much later, the start of this website.

Photo credit: Éamon
Forbes, Tavis Smiley

Article comments

Donna Freedman says:

Although it’s harder to get a credit card these days, older students might still be able to get them. I think it’s a good idea to HAVE a card, but not to use it too much.
I would urge students to buy things they need anyway — cold medicine, weekly groceries, textbooks — with the card and PAY IT IN FULL as soon as the bill shows up. Then put the card somewhere safe; don’t carry it with you, ever, unless you’re on a specific errand to pick up cold medicine.
It’s great for you to have a credit history. It’s great for the card companies for you to carry a balance. Your choice.

Anonymous says:

Nice article. I indirectly learned about personal finance from my mom early on in life. Hence, I never wanted a credit card bc I don’t buy things unless I have the money. This being said, I didn’t sign up for a credit card during college, when they are very easy to get. After finishing my undergraduate degree, I finally decided I should get a credit card just to build credit (of course I would pay it off at the end of each month not to incur any interest expense). Being older with no credit, not bad credit or anything – just no credit – made it hard to get a credit card at this time. I had to start with a secured credit card to prove myself to the bank, which I did, before I could apply for a real credit card with an unsecured balance. For this reason, I would have gotten a credit card in college. 😛 But it’s not a good idea for most.

Don’t worry about the What-ifs, I think it’s great that you learned about personal finance through certain experiences (key – you learned from it) and never looked back. 🙂 Congrats on your site!

Anonymous says:

How about don’t slack off and get your degree as quickly and with the highest GPA possible.

Anonymous says:

I agree with get the degree as quick as possible. But i’d say know if that higher GPA will be valuable to you down the road. Lear the material as best you can. Don’t worry about the GPA unless you plan to move on to another school program after graduation (doctor, lawyer, etc). I’ve not had anywhere care about my GPA after graduation.

Anonymous says:

Great job with sharing valuable tips. I wish I opened the Roth IRA – I could’ve improved my retirement balance!

Anonymous says:

Great post. I wil second the advice about credit cards. They are marketed to the students so much nowdays. I went to college as a nontraditional student and had to pay for my education myself. I know that I studied harded and tried to get more out of the classes. I also like that you mentioned to be careful with part time work. My brother in law is currently attending school on a program that pays to retrain him in another field. He does not work but the state does give him a check that should be okay with budgeting. My sister wants him to work at the same time and I am always telling her to let him go to school. It is hard work in and of itself. Thanks for backing me up Flexo.

Anonymous says:

I would also add look after your health. So many people end up just letting themselves go in college that when they graduate they end up being really unhealthy and even have serious medical problems. Medical problems cost money so it is best to look after yourself and prevent them. Plus, you want to actually be able to live your life once you are done your degree right?!

Anonymous says:

Great post – I stayed close to home for three of my four years in college, with my parents paying for tuition, room and board. I always had a job to pay for extras during those years, but I managed to join a couple of clubs and have a social life. However, when I graduated, I was in debt about $8k – not from student loan debt, but from CREDIT CARDS. Ugh. Even though I got a job immediately after graduation, I had hundreds of dollars in credit card payments to make every month.

My oldest is starting her second year of college and we’ve manage to pay for it with some grants and scholarships she’s earned on her own, plus help from us. I’ve also shown her the beauty of couponing and how she can at least save on food and other items in order to have money to blow on clothes, football games, movies and whatever. Her friends tease her about using coupons when she goes grocery shopping (I clip the ones she would use from my paper at home and mail them to her), but she’s laughing all the way to the bank. I’m proud of her.

My parting advice to her last year was: STAY AWAY FROM CREDIT CARDS! It’s not worth the t-shirt or water bottle. (Although I believe CC companies can’t do that anymore.)

Anonymous says:

Most students today may find this archaic, but it helped me that I did not have a car until senior year. Not only because of the expenses of insurance and gas, but when you have wheels you go out and find much more to spend money on. I walked everywhere(never needed to go to the gym) and never felt deprived. When I got the car, I traveled farther to bigger cities and found more ways to spend money. In retrospect, I am glad that I only had the car for one year of college.

Anonymous says:

What a resourceful post! To stop using my credit card, I put it safely in a drawer and didn’t take it out until it was absolutely necessary. I also stopped using brand name prdoucts and started using more generic products. You’d be surprised as to how much money you save. I also got off my contract phone plan. I wasn’t using all the minutes so I was wasting money every month. I did some research and ended up buying a pay as you go Net10 phone. Even though it’s not as glamorous as the iPhone, it gets the job done. I can make calls and send texts. With my $30 phone, I got 300 minutes free. I also just pay for the minutes that I want. These tips should work wonders for students on a budget.

Anonymous says:

A very comprehensive post here and great pointers for students starting on the final part of their journey to “adulthood”. I did a recent post on this topic as well and I would say you need to be cautious with part time work. Extra money is great while at college, and necessary in some cases, but don’t forget why you are here – to learn! When I was in college (or university as I called it) I knew a class mate who had 3 part time jobs (2 night jobs and one daytime retail role). This was great for his cash flow and he was always the biggest spender of the group. It also made him popular with others who would count on him for a round of drinks whenever he was at the bar. However, he sacrificed valuable study time for working (and maintaining an active social life) which meant he fell behind in his studies, including missed classes. He finally got back on track when he had to repeat and pay again for the entire semester, but still graduated a year after the rest of us. In financial terms, the opportunity cost of graduating a year later is equivalent to one year of salary from a full time job and the additional tuition costs – far more than most part time jobs are worth. Also you will be one year behind your peers in experience and top employers prefer not to hire students with poor grades. Money from part time work is great in the short term, but don’t over do working while at college because you could be sacrificing much more in the bigger scheme of things.

I like the Roth IRA option, but would be cautious of entering it unless you have enough free cash flow to last through college. Credit cards are dangerous, but do provide a lot of cash flow flexibility if used properly.

Anonymous says:

Good post as always! I, too, wish that I stayed more within my means during college on the credit card side.

One point that I have to disagree with is “not to let work interfere with your studies.” I’m not trying to pat myself on the back, but I worked full time — the whole time — while going to school full-time and I have to tell you, its the best move that I could have made. Upon graduation, when most of my fellow graduates had to start in the low 30’s because of lack of experience, I was running the accounting department that I had worked in during the years at school. I think as Bachelor degrees become more and more prevalent, experience will count for a whole lot more down the road, so knock out 2 birds with 1 stone and try to work in a job that you can grow with AFTER college (not at Krispy Kremes {not that there’s anything wrong with that})!

Anonymous says:

Great post. I was “fortunate” to pay my own way through college. Of course Uncle Sam helped me with Stafford loans but I will always remember what my parents told me before I left my hometown for college. They said, “Hey have a good time. If you want to stay there for 6 or 7 years go for it. You’ll have a blast but remember you’ll be paying for it.” I was out in 4 years on the dot! As painful as this was, it taught me some financial responsibility. I also worked throughout my whole college career. If I had done anything different I would have followed your advice on avoiding credit cards. I signed up for every little $500 limit card I could get my hands on. While I always made my payments, I spent more than I needed to while making my meager part-time job wages.

Anonymous says:

One thing I found is that going to school in larger city makes it easier to find part time jobs, internships, and better paying jobs.
In smaller cities the student body makes up a significant part of the population and can completely dilute the job market.

Anonymous says:

This is a great read. I especially like the part about knowing who pays for your college. It makes sense to try even harder when it’s someone else footing the bill!!