Top Financial Tips for College Students
Good money management habits aren’t taught in school, yet students who develop money saving skills in college get a HUGE head start on financial freedom later in life.
To get you started on your financial journey, here are four key tips to keep in mind.
Top Four Tips for Financial Freedom
In this article, we’ll cover our top pieces of financial advice for college students, including:
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1. Spend less than you earn
“Spend less than you earn” is the North Star of all personal finance advice, and it’s as simple as it sounds: if your income is higher than your expenses, you’ll have money left over.
Of course, making and saving money isn’t so simple. Here are some tips to get started.
How to make money:
- Win scholarships. This one’s easy. Start by applying to easy scholarships, and don’t forget to sign up for personalized scholarship emails! For more about how you can save money for college through winning scholarships, read our Ultimate Scholarships Guide.
- Apply for grants. Fill out the Free Application for Federal Student Aid (FAFSA) each year you’re in school. The federal government uses the information on the FAFSA to determine whether you need financial aid, and will in some cases award Pell Grants (that don’t need to be paid back).
- Get a part-time job. While balancing school, a social life, and a job can sound overwhelming, any amount helps! If you earn $10 an hour while working 10 hours every week, that will add up $20,000 of pre-tax income by the end of your four years in undergrad!
How to spend less money:
- Take advantage of student offers. Companies offer tons of great discount programs to students. Amazon has Amazon Student, which gives you a risk-free, six-month trial of Amazon Prime and unlimited streaming with Amazon Video.
- Budget. Proper budgeting gives you an idea of where you’re spending money, and where you need to cut back. There are a ton of great online tools to help you manage your money without feeling overwhelmed. One of our favorites is the free budgeting tool offered by Personal Capital.
- Get creative! Consider renting your textbooks instead of buying them new, and think about cooking for yourself instead of paying for that overpriced meal plan.
2. Build your credit score, starting now
Length is an important factor in your credit score, and credit score is a key piece of your personal data profile that becomes a factor when purchasing a home, securing a car loan, and even applying for jobs.
To start building credit if you have none, begin with a student credit card. With on-time payments and responsible use, you can begin building a healthy credit profile. Just make sure to limit the number of credit card accounts you open and to always pay your balance in full each month.
The Deserve EDU is a great starter credit card for many students. On top of 1% cash back, the card offers free Amazon Prime Student (a $60 annual value) and secondary cell phone insurance when you use the card to pay your monthly bill (up to $600 for a broken phone)!
3. Stay on top of student debt
Student loans are one of the first ways people encounter debt in their life. If you’re in the market for student loans or have loans you’d like to refinance, consider checking out a private student loan marketplace to better manage your debt. Credible and PrivateStudentLoans.com are a few of our favorite options for comparing different student loan interest rates and terms.
4. Invest ASAP!
Finally, due to the magic of compound interest, it pays to invest your money as soon as possible. This YouTube video from Investopedia explains compound interest well. While investing for retirement is important, you should typically pay off any credit card debt before investing money long-term (due to the high APR on credit cards).
As a college student, you still have some time to figure out your financial life. Luckily, you’re already getting a head start from reading this article! By taking the time now to develop good money skills, you’re positioning yourself for long-term financial freedom.