September 8, 2016. By Olga Okaty:

With  college send-offs wrapping up and a new semester in full swing, parents and students are now settling into their fall routines.  As we witnessed many families in the midst of exciting college preparations this summer, a topic we heard mentioned often in our financial planning conversations concerned how a student can begin establishing good financial habits while still in college.  While the college years can be difficult to budget due to inconsistent income and unpredictable costs, there are many ways that a student can indeed begin to build a solid financial foundation.  Here are our top five student financial tips:

Develop a Budget 
As the first semester gets underway and you gain a better sense of campus life, assess the funds you have available for expenses and establish a budget right away.  A great resource is our College Budget Worksheet.  While many items such as tuition or a meal plan may have been already pre-paid, there will still be many discretionary items that can easily add up and lead to overspending if not budged thoughtfully.  Allocate your budget between necessities (for example, groceries, toiletries, laundry, transportation, class supplies, etc.) and discretionary or recreational spending (dorm décor, takeout, movies, concerts, etc.) and try to stick to it.  Use student discounts wherever you can.  Don’t forget to set aside funds for big ticket and wish list items such as spring break trips or summer travel as well.

When establishing a budget for an entire semester, break it down into weekly amounts for ease of management.  If you think you will use $100 per week, move only that amount into your checking account each week and leave the remainder in savings.  Leaving a large sum of funds in a checking account with a “budget” figure in mind is difficult to do and will likely lead to overspending.  Many banks offer mobile apps allowing you to quickly see your balances in all your accounts, and easily move funds from savings to checking in an instant if there is an emergency.

Establish Consistent Savings
If you have earnings available from your summer job, or plan to perhaps work part-time throughout the school year, allocate at least 20% of your income to a separate savings account to serve as an “emergency fund” for unexpected large expenses as well as to begin building long-term savings for future opportunities.  Establishing strong savings habits early on will help you balance multiple financial commitments later on in life.

Begin Building Credit
Once you are comfortable with budgeting and savings, consider opening your first credit card to begin building a credit history.  This card should be used only for emergencies and should have a low credit limit of $500-$1,000 and no annual fees.  Any charges on the card should be paid off within 30 days to avoid accruing interest, and to ensure you don’t miss any payments, be sure to sign up for email payment alerts and make your payment well ahead of the due date.

Consider Living in Off Campus Housing
Living off campus with roommates may reduce housing costs and allow greater independence. Make sure you are aware of all costs associated with the house/unit you are renting.  Are utilities provided?   If not, how is the unit heated?  Electric heat tends to be more expensive than oil or gas.  What about cable and internet?  Trash removal?  Snow removal?  In whose name will these accounts be registered?  If there are roommates, it will be important to have a clear (preferably written) agreement of how all common expenses are to be divided and when money will be due to whoever is ultimately paying the bill(s).

Consider Career Plans
This one is commonly overlooked, yet critically important!  As you explore different courses and fields of study, consider career options that can not only keep you engaged and fulfill you intellectually and spiritually, but also realistically provide a level of financial support that will allow you to afford your desired lifestyle after graduation (especially if you will have student loan obligations to repay.)  The career landscape is changing rapidly and making it easier for students to limit the trade-offs between choosing a major which meets their interests and one that will increase the chances of financial success.  Alongside an academic counselor, discuss the possibility of pursuing a minor field of study, a double major, and the availability of mentors at your educational institution who may be able to provide guidance in the fields that you are most interested in.

College is an exciting time that offers many opportunities to learn not only in the classroom but also through newfound responsibilities and greater independence.  As you begin discovering and building your life path and vision, take advantage of all the resources available on campus and through your trusted professionals to get a head start on your post-graduate years.