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7 Tips in Money Management for College Students

Managing your money in college means learning to budget for expenses, being mindful of borrowing and beginning to establish credit.
May 21, 2019
Loans, Student Loans
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For many students, college is full of fun firsts: your first time living away from home, joining a sorority or fraternity, and tailgating for football games, to name a few. But all of those things cost money, and Mom and Dad won’t be there to help you pay for everything or manage those costs.

» MORE: College survival guide for your money

To help you get off on the right foot financially, experts offered these seven tips in money management for college students.

1. Use apps to develop a budget

Knowing how to create a budget is a life skill. Unfortunately, it’s not often taught at school or at home, so it’s usually up to students to figure out how to track their expenses. Being aware of your spending is a good place to start, says Mark Moller, dean of first-year students at Denison University in Ohio, and that awareness is easy to achieve with finance apps, such as Mint.

» MORE: How to pay for extra college expenses

Knowing how to create a budget is a life skill. Unfortunately, it’s not often taught at school or at home, so it’s usually up to students to figure out how to track their expenses.

How much you spend on expenses such as utilities and food is to some extent up to you. “Know where you spend your money and consciously decide how you want to spend that next $1 bill,” says Steve Booker, associate vice president and director of financial aid at Rollins College in Winter Park, Florida. “You have to eat, but can you purchase a different meal plan, or if the meal plan is a la carte, could you choose different items?”

Need help starting your budget?

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2. Get a credit card—then pay it off

With credit cards, you don’t have to worry about overdraft fees like you might with debit cards. But you still run the risk of getting hit with costly interest charges if you don’t pay off your monthly balance.

“Establish a small line of credit, $500 or less, so that you are not tempted to overspend,” says Jonathan Boleratz, former director of financial aid at Allegheny College in Meadville, Pennsylvania. “By doing this you will be establishing credit history for yourself.”

The key is to spend only what you have. “Credit cards can [make it] seem like you have plenty of money, but owing credit card companies is one of the worst ways to get behind financially,” says Kyle Rhodes, assistant director of residence life at Rose-Hulman Institute in Terre Haute, Indiana. If you have trouble paying off your credit card each month, a debit card may be a better option.

3. Choose a bank wisely

When opening checking and savings accounts, students should consider options base. If your goal is to earn interest, look for a high-yield account to help your balance grow faster. (The best savings accounts earn 2% APY or more.) For other students, a free debit card or an online payments feature may be more important, says Booker of Rollins College.

» MORE: Lessons in financial literacy for college students

Take into account a bank’s location. For those who prefer to talk to someone face to face about their finances, consider opening your accounts at a bank you can get to easily, Moller of Denison says. They may even have lower rates for college students, so they are worth checking out.

4. Borrow as little as possible

With loans, for college or any other reason, it’s important to take out only what you need; it may feel like free money, but it isn’t, and you don’t want to pay interest on money you didn’t absolutely have to borrow.

Save as much as you can from jobs held over the summer and throughout the year to help you pay student loans on time, suggests Greg Gearhart, director of financial aid at Messiah College in Mechanicsburg, Pennsylvania. Pay as much out of pocket as possible to keep borrowing costs low.

» MORE: How much can I afford to borrow for college?

5. Use school breaks to earn money

It can be tough to pass up a trip with friends, but consider the long-term payoffs when deciding to work or travel during breaks.

It can be tough to pass up a trip with friends, but consider the long-term payoffs when deciding to work or travel during breaks.

Boleratz says he chose to work when he was in school. “[My job] helped me pay for spring costs as well as Christmas gifts for my friends and family. My employer loved me for it, too, since I was available and working overtime during the busiest shopping season. So on top of the money, it provided an opportunity for me to get an employer recommendation to add to my résumé,” Boleratz says.

6. Cut out the little things

Avoiding some of life’s little splurges—cooking instead of eating out, for example—will add up to big savings over time. “Do you really need to buy that snack or drink every day?” Rhodes of Rose-Hulman asks. “Cutting out the little things makes a big difference over time. Cutting out a coffee from Starbucks each day can save you up to $1,000!”

» MORE: Have a car on campus or not? It’ll cost you either way

7. Be realistic about expenses

Don’t forget about one-time expense such as textbooks, laptops, bed sheets and plane tickets. While those items may be necessary, cutting out costs that aren’t will help you to live within your means. As the saying goes, “live like a student now, so you don’t have to later.”