Updated June 28, 2015

23 Smart Money Moves to Make in College

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Unless your high school taught you about personal finance, you'll have to teach yourself how to manage your money in college. Here are 23 smart moves to make before you get your diploma.

© William Grootonk (CC BY-SA 2.0) via Flickr


1. Choose the right bank
Keeping your spare change in your sock drawer or a plastic pig is kids' stuff. Now it’s time to make the leap to banking like a grown-up. Not all banks are created equally, so find one that offers the convenience and services you need. Taking some time to research online banks, community banks and credit unions can pinpoint the one that will give you the best combination of convenience for how you would like to bank. For example, do you prefer to do everything over your phone? Can you set up a linked account to your parents’ main banking account? Is the highest savings rate possible the main criterion for you?

2. Open a student checking account
Free checking accounts are quickly becoming a thing of the past, but you can still get a deal by signing up for a student account. While you're looking at banks, see if they offer student accounts, if they have a minimum opening deposit, and whether you're required to maintain a certain balance each month. The fewer restrictions, the better.

3. Automate your payments
Most banks offer online bill payment services so you can link all of your outside accounts directly to your checking account. Putting your bills on autopilot eliminates the hassle of keeping up with due dates, letting you fully focus on your studies. You won't have to worry about being hit with late fees or having a missed payment affect your credit score. The catch here, of course, is that you need to make sure your account is funded frequently enough that you’ll be able to cover these payments. For that reason, you may want to automate a few bills but manually pay larger ones, such as rent.

4. Develop the savings habit
For many students, the college years are all about learning how to live on a shoestring. You can find room in your budget to save a little. Opening a savings account that's separate from your checking and transferring even a couple of bucks a month can help you get into the savings groove and build a little cushion for emergencies. This is the time to get into the habit if you don’t have this discipline already.

5. Make the most of mobile banking
Tech-savvy students should be taking advantage of any mobile services offered by their bank. Being able to check your account balance, schedule transfers from one account to another or make deposits right from your smartphone is a definite plus as you're constantly on the go. And it’s super important if paying attention to your cash flow – however weak it may be at this point – is completely new to you.

6. Keep fees to a minimum
Over the last couple of years, bank fees have been on the rise as the financial services firms pass their recession-related regulation costs onto consumers. If you bounce a check or overdraft your account with your debit card, it could cost you 30 or 40 bucks a pop. Monitoring your balance and checking your statements regularly for hidden charges can help keep fees from draining your account.


7. Track your spending
When you're not keeping tabs on where your money's going, there's a good chance you're going to end up broke at some point. Taking the time to write down everything you spend lets you see what's eating up the biggest chunk of your cash. Once you run the numbers, you might be surprised at how much you're shelling out just to have fun with friends or for satisfying those midnight pizza cravings.

8. Don’t buy things just because someone tells you to
A professor tells you to get the latest and greatest textbook, so you run off to the campus bookstore and charge it, convinced you’re doing right by your education. That may be OK for your first semester as a freshman, but more experienced students know to look at all other avenues before purchasing a new book, including used book sections, online resources, and older roommates’ bookshelves. For many colleges, you don’t have to live in the dorm after freshman year, and you may find renting to be much, much less expensive. This is a time to start questioning — while still respecting — authority and evaluating whether what you’re being told to do makes sense for your wallet.

9. Be realistic about your lifestyle
College usually isn't about living in luxury. For most students, sharing a 15 x 15 space with one or more people and wearing flip-flops in the shower is the norm. Getting comfortable with living within your means when you have very little money gives you an edge once you're bringing in the big bucks at your first job. In fact, it’s a common trait of the wealthy. According to studies, many millionaires have always been frugal — or at least until they bought their first Mercedes.

10. Avoid giving in to peer pressure
College is all about making new friends, but some of them are just plain bad for your finances. Be wary of those who seem to spend without a care in the world and those who are constantly mooching off everyone else. While you can still be friends with these people, you should be cautious about how much you let your buddies influence your financial decision making.

11. Set some goals
It’s tough to save much money if you don’t have a goal. Set a realistic goal for what you need or want — whether it’s a car, a spring break trip, or an X-Box splurge — and figure out how you’ll realize that dream. You may have to downgrade your expectations (Do you really need a car at this point? Can you make do with a staycation?), but at least you’ll be able to get somewhere without burning a hole in your wallet.

Credit and Debt

12. Take a crash course in credit cards
Applying for your first credit card is a rite of passage, but it's not something you should do until you've done your homework. Before you sign on the dotted line, you need to understand the basics of how they work, starting with how interest rates and finance charges are calculated. Together, they determine the actual cost of paying with credit, which is often an eye-opening concept for first-time users.

13. Work on establishing credit
Thanks to the 2009 CARD Act, college students under the age of 21 can't apply for a credit card unless they can demonstrate they have a certain amount of income coming in or they have a co-signer. If you can't get a card on your own yet, you can still start building your credit history by having your parents add you to their account as an authorized user. Just remember that they're ultimately responsible for anything you charge, so you should be careful with how you use the card.

14. But don't get in over your head with debt
Credit cards aren't free money; anything you spend has to be paid back, plus interest (if you don’t pay the full balance when it’s due). Unless you have an extreme emergency that requires you to use a credit card to cover it, only use it for purchases that you can pay off by the time the bill is sent to you. Charging a pricey new pair of jeans or upgrading your laptop may not seem like a big deal at first, but they could turn into a huge mess of interest charges if you can’t pay off your balance every month.

15. Pay attention to your credit score
Your credit report and credit score are two different things, with the former affecting the latter. The lower your score, the harder time you’ll have getting approved for new credit or getting the best interest rates. If you'd like to buy a home or take out a car loan at some point, a low score could be a major obstacle. Always paying your bills on time and keeping your debt totals low are the best ways to work on your score while you're still in school.

16. Set limits on loans
If you manage to get through college without digging yourself into a student loan debt hole, consider it a major accomplishment. These days, the average grad leaves their alma mater with about $30,000 in loans. If you have to borrow to pay for your degree, you’re not alone, but do keep searching alternatives as the years go by. You may become eligible for scholarships, grants and work-study programs as you progress. You may even become eligible for a federal loan that’s much, much cheaper than that private loan you had to get for your first year.

17. Map out your repayment strategy
Students who take out federal loans have several repayment plans to choose from, including some that are based on your income. You're automatically put on the standard plan unless you specify a preference, so it's to your advantage to read up on how the different options work and make a change if necessary. Otherwise, with a plan you can't afford, you're just setting yourself up for trouble once the loans come due.

Planning for the Future

© Nazareth College (CC BY 2.0) via Flickr

18. Check your insurance coverage
Because of Obamacare, health insurance is now mandated for everyone unless you qualify for an exemption. Fortunately, students can stay on their parents' plan until age 26. If you're not able to get coverage through your parents' insurer, look into student health insurance plans or shop around the federal marketplace to see how the rates compare. Keep in mind that if you decide to skip out on coverage altogether, you could be subject to a tax penalty.

19. Gain some work experience
Students are facing one of the toughest job markets in recent memory, and it often takes more than just a degree to get your foot in the door. Don’t view an internship or volunteering opportunity solely as an activity that can help you determine what you want to do with the rest of your life — such work could actually land you your dream job.

20. Research that dream job’s payout
The idea that if you do what you love, the money will follow is a popular one in personal development circles, but that maxim may not hold true for everyone. If you've got your heart set on a specific career, you need to have a realistic idea of what you stand to earn. That's especially true if you're considering taking out thousands of dollars in loans to complete your degree.

21. Get educated about investing
Investing may seem like a scary thing but only if you don't know what you're doing. You don't have to become a day trading pro when you're trying to balance a full course load, but you should learn the difference between a stock and a bond, even if you’re not an econ major.

22. Start thinking about retirement
For most students, retirement is still roughly 40 years away, but now is the time to educate yourself about it. The sooner you start saving, the better. When you’re young, you can afford to take more risks, which result in higher returns over the long term (and we’re talking decades). And, you can earn interest upon interest upon interest. You want to get the concepts down pat before that first 401(k) is dangled in front of you.

23. Hope for the best but plan for some snags
Just about half of college seniors who apply for a job get an offer, according to a 2014 survey by the National Association of Colleges and Employers. This means you may have to wait before you can get your hands on a full-time paycheck. If you behaved yourself financially during your years in school, you should be able to withstand the wait. Or you may need to do some negotiating with Mom and Dad.

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