Written by: Daniel Gleich
College is a big time in a young person's life and comes with a lot of new changes: moving out of the house for the first time, taking care of your own schedule, and, of course, budgeting. Financial responsibility is important in college, especially with all the new opportunities to go out with new friends. As fun and exciting as it is to try new things, many of them require money to participate in, and while it can be fun to spend money freely with your friends, it can be detrimental to your finances. That's why it's important to learn more about money and how to use it responsibly while in college.
Money management, or budgeting, is an important skill that should be learned before college starts, but that's not always possible for some people. Luckily, it's never too late to learn how to budget. It's especially important to make and stick to a budget in college if you have income from a part-time job or a stipend that you need to make last. Start out your month by listing your income and all of your planned expenses. Once you've done that, calculate how much you'll have left over for fun things and aim to set a little bit of money aside for future emergencies. You should also look for opportunities to cut costs where you can. For instance, you could use coupons when you get takeout, buy clothes on sale or at thrift shops, or shop around to see if you can buy any of your textbooks anywhere that's cheaper than the college bookstore. If you budget well and deposit your savings into a high-yield savings account, you could end up with a nice little nest egg to start you off after you graduate.
Credit is incredibly important because it determines your ability to qualify for a loan, rent an apartment, or buy a car. When you pay your bills on time, including your student loan payments, then your credit score will go up. But if you miss a payment or default on a loan, your credit score will drop. If you're eligible for a credit card, consider getting one with a low interest rate to help build up your credit. But remember that this isn't free money: You need to use it wisely, and when the bill comes, you should always be sure to pay it on time.
Unfortunately, life isn't always sunshine and rainbows, and sometimes, accidents and emergencies will pop up that require large sums of money that you didn't budget for. That's why you need insurance. Make sure that you have health insurance, car insurance, and renter's insurance, which can help to lessen the financial impact of a potentially expensive situation. You should also keep putting money into your savings account for situations like these. It's better to be able to pull money out of the bank to deal with an emergency than to have to go into debt.