15 Things College Students Can do NOW to Build Better Money Habits

Libby Miller Updated on July 11, 2018

If you're like many young adults, going off to college is the first time you're wading out into the big, bad world of independent living. 

While the main focus is, of course, getting a quality education, college also provides a great opportunity to develop the money skills you'll need after you graduate. 

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Now is the time to learn how to balance your budget, shop smart, and set yourself on a trajectory to make strategic financial decisions for the rest of your life. That means building a foundation of financial literacy now. 

What is financial literacy?

Being financially literate means knowing how to manage your money—both income and expenses—in the most efficient and effective way possible.

Key to financial literacy is understanding how to create a budget and stick to it, along with making smart financial decisions with each and every purchase that you make.

The more financially literate you are, the more likely you are to:

  • Maintain a favorable credit history
  • Get the best deals when borrowing
  • Avoid saddling yourself with unreasonable amounts of debt, and
  • Secure a stable financial future for yourself.

Here are some tips that can help you build up those financial literacy muscles now:

1. Look for the best deal on your college education

Before you even head off to school, take part in budgeting and comparison shopping for your future college. Figure out what your family can realistically afford to pay and what schools fall into that price range.

Taking part can help you to mentally connect the dollars to the school you ultimately choose.

Is the higher-priced school really a good investment, when you can get the same degree elsewhere but graduate with far less student loan debt?

Take the opportunity to also explore not only how much to take out in student loans, but how much you would have to pay back each month in student loan payments after graduation.

Try out our NitroScore tool to compare schools and majors and don't forget to budget for textbooks and other oft-overlooked expenses.

2. Open a bank account

Establishing a bank account and depositing your paychecks is a safer way to keep track of your money and keep it protected. It's also a good way to access those extra school funds left over after financial aid disbursements.

Just remember to choose your bank wisely. Don't automatically assume you have to use the account your school sets up with their partner bank.

Read the fine print and know what you're signing up for.

Many banks offer free accounts to college students, so shop around and find the best offer.

Also, make sure you understand their fee structure. Avoid banks that charge excessive fees and set your debit card up to reject a purchase rather than overdrafting the account and having to pay an overdraft fee.

3. Maintain a part-time work position 

Having a budget of your own to balance and knowing how your work dollars affect it is one of the best ways to learn financial discipline.

Data from the Department of Education shows that students who work 12 hours or less in college actually get better grades in school. 

Just don't go overboard on the workload. Students that work too many hours can struggle to balance the demands of both and their grades can suffer as a result.

One way to ensure you stay balanced: look for on-campus jobs.

Jobs specifically tailored for college students will be more likely to adapt to your full-time class schedule than jobs like waitressing or cashiering where you're scheduled whenever you're needed most.

4. Track all your expenses

Oldtimers can remember a time when each and every expense was written down with pen and paper in a checkbook ledger in order to track your bank account's balance.

Nowadays, modern bank accounts are primarily managed online or in an app, so mercifully we no longer need to write everything down ourselves. 

Still, it's to get in the habit of logging in to their bank accounts online, going over your purchases, and making a budget.

Good habits include tracking the cost of a certain expenses over the course of a month—how much is that occasional morning latte really eating into your spring break fund? How much are your Uber rides costing you each month?—can give you a better sense of where your money is going and how to pare back expenses when needed.

Check out apps like Wally, Mint, or Acorns to help you sort and manage for your expenditures.

Another reason to check on your expenses—you can catch fraudulent charges to your account early and contact your bank to reverse them.

5. Set aside a little bit of each paycheck for emergencies

Having a financial safety net is an essential part of being independent. In order to prepare for emergencies and avoid unexpected debt, it's a good idea to get in the habit of stashing away a sliver of each paycheck for a rainy day.

Whether it's an essential car repair, a pet illness, or something more major, everyone needs a chunk of change saved up when large expenses come arise, which they inevitably will. 

Getting in the habit of always setting aside a part of your paycheck—10% is a good benchmark—is a mental trick that makes it easier to save.

When your brain is trained to expect a smaller amount in your account, you'll automatically limit yourself to that budget.

If the money remains in your checking account, it's more tempting to spend it.

One easy way to save is to have it taken out automatically. If your paycheck is deposited directly into your bank account, check with your bank to see if a portion can be shifted to savings automatically, too. 

6. Save up for a large purchase or trip

Along the same lines, saving up for a big purchase can be a fun way to develop discipline in spending.

Saving up for a spring break vacation or a new cell phone can give you a tangible goal to work towards. Developing the self control to wait until the funds are there to splurge makes the reward more rewarding and gives you a self-confidence boost.

Just make sure this slush fund is different from your rainy day savings. You don't want to tap out your emergency fund on something fun only to later find yourself in a pinch with no extra funds to draw from.

Need helping developing the discipline? Check out an app like Good Budget or Mvelopes to help you set it aside. 

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7. Comparison shop your living situation

Searching for housing is a great way to learn the true costs of renting, because a lot goes in to picking the right place. Just comparing costs between on-campus dorms and off-campus apartments can be confusing.

Then there are other factors to consider: How many roommates do you want? Are you sharing a room or do you get your own? What about bathrooms? Will you need to take out student loans to afford it?

Make sure to consider the full cost of living off-campus. One apartment might be more expensive but offer free parking or be within walking distance to school, while another apartment's cheaper cost may be offset by the cost of renting garage space or purchasing an on-campus parking permit.

Utilities are another important piece to consider before signing a lease. That big, old house with the cool front porch might rent for cheap but what does it cost to keep it warm in the winter? Will you have to mow the lawn and if so, do you have to be the one that gets a mower?

Is there a washer and dryer in the house or will you have to go to the laundromat?

Dip your toe in the world of housing searches by looking for apartment rentals on Craigslist or other sites. Get to know what's available, how much a typical apartment goes for and which neighborhoods you can afford. 

Just getting to know the housing market is half the battle.

8. Manage your own monthly bills

When compared with living in dorms, living in an off-campus apartment can better approximate what living independently after college will look like.

Living on your own means setting up utilities and managing multiple monthly bills. And there are also real repercussions for students who miss payments.

But on the bright side, typically students live off-campus with friends and can rely on each other to manage and share expenses.

Learning to juggle all of these pieces before you're out of college will greatly improve your financial resilience after you graduate.

9. Cook on a budget

A food budget is a fact of life for adults. No matter who you are, you gotta eat and regularly. But there are also many different ways to go about feeding yourself and the decisions you make have a huge impact on your bottom line.

Learning how to cook on a budget is an art and a skill that you can rely on for the rest of your life. Finding out how to make foods you like to eat that don't break the bank is balancing act that can also be a fun experience at the same time.

If you put a few simple, delicious dinner recipes in your cooking arsenal, you'll find it much easier to save money in the future by pulling together a low-cost meal at home instead of relying on expensive take-out or unhealthy fast food for a quick bite at the end of the day.

Check out food blogs and recipe sites like Serious Eats or Allrecipes.com to sift through recipes and watch how-to videos. You could also find some classic Julia Child videos on YouTube or turn on the Food Network. 

There are plenty of ways to not only learn how to cook for yourself, but to do so in a way that satisfies both belly and budget.

10. Use great caution with credit cards

The number one rule on credit cards is this: don't open one until you know what you're getting yourself into.

Do you know how compound interest works? Do you know what an APR is? You should before you get a credit card.

Using a credit card and then paying it off can demonstrate financial responsibility to the credit bureaus and improve your credit score.

But it's important to be very careful, because the opposite is also true.

Many, many college students have ruined their credit by taking easy money from credit cards and digging themselves a debt hole they can't get out of.

One strategy some students use to build up their credit is to only use their credit card for one specific expense such as buying textbooks or gas to drive to and from school.

If you make small purchases and regularly pay the balance off in full, you'll avoid racking up interest charges, but still get that boost to your credit score.

Start by comparison shopping credit cards and learning the different APRs, fees and options available. Websites like The Points Guy and Consumer Reports can help recommend reputable companies.

11. Take a financial literacy course

You don't have to learn all of these financial lessons on your own. Many schools know the importance of being savvy about money and offer semester-long courses specifically designed to teach students the ins and outs of smart money management.

Financial literacy courses are taught by business professors who cover core skills like budgeting, smart borrowing and paying off debt. In addition to formal courses, seminars are often available to students.

Keep your eyes peeled for relevant classes in your school's official course offerings as well as for posters for one-time workshops around campus. 

Rather learn online? Check out MOOCs which are free, massive open online courses. Available to anyone and everyone, you can participate at your own pace while learning from professors at major universities.

12. Understand your credit report and FICO score

Credit scores and credit reports are vital financial tools that banks and other businesses use to measure how financially responsible you are. They may determine whether a bank will give you a mortgage or let you open up a new credit card as well as how high the interest rate is on that loan or card.

Learning about the factors that influence your credit report and FICO score and what you can do to improve your score are essential steps towards controlling your financial future.

But not all sites are created equal.

AnnualCreditReport.com is the only site federally authorized to provide a free record from all three credit bureaus.

Other sites like CreditKarma or Quizzle are designed to use your financial data to market products specifically for you.

To get your FICO score, you can pay $8 on AnnualCreditReport.com. Some credit cards also provide a free FICO score update for their customers through their online accounts, so make sure you check for your free options first before paying.

Most of all, remember to tread carefully before giving out your personal info. Make sure the site you're using is secure and reputable and know whether your information will be shared with third parties.

13. Take part in your portion of taxes

Doing your taxes is the opposite of fun, but everyone has to do them eventually.

When your parents sit down to the taxes, join them and get to know how your income and student loans affect them.

Whether your parents use TurboTax, TaxAct.com, file by paper or use another method, learn about the steps involved in filing and the forms you'll need to do so.

Getting into the flow of how to file your taxes is great practice for when you're out on your own.

14. Test out financial planning apps

There's a lot more to managing money on your phone than just your bank's app.

Nowadays, there are a myriad of different budgeting websites like Mint and You Need A Budget that help frame your finances in ways that make it easier to save.

Try out a few and just see how they work. They may not be the ones you want to use long-term, but understanding how each app works can help you to sort through different techniques for managing your money to find the one that's best for you.

15. Keep educating yourself

When it comes to financial literacy, your work is never done. Like everything else in the world, the money world is ever-evolving and constantly rebranding.

The tools and knowledge you've developed may be enough now, but you never know what financial challenges and opportunities are on the horizon.

Find a reputable media outlet like Forbes, Bloomberg, The Balance, or The Motley Fool, whose advice you trust and follow them on social media or subscribe to their newsletters.

Do your research before diving into any big financial decisions and read from a variety of sources.

In general, when it comes to your money, the more you know the better off you'll be.

See also: 5 Ways to Maximize Your Meal Plan

About the Author
Libby Miller

Libby Miller is a freelance copywriter. With experience working in both financial aid and the student loan industry, Libby loves helping students and their families get the best bang for their buck on a college degree. Read more by Libby Miller

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