Heading off to college is exciting, but it can also be expensive. And smart money management plays an important role in making your college experience fun, enjoyable, and comfortable — just like it should be.
A financial plan helps ensure your basic needs are met, so you can focus on your studies — and your social life — rather than stressing about your bills. Plus, the good financial habits you develop early can build on each other over time, so you can live a comfortable life after graduation and feel in control of your finances.
Fortunately, money management as a student doesn’t have to be complicated or time-consuming. Follow these 8 easy tips to build solid financial habits, manage your costs, and put yourself on track for long-term financial success.
1. Start with the right bank accounts
Having the right bank accounts makes it easier to reach your financial goals. And even if you’ve had a bank account for years, now’s a good time to re-evaluate your needs and make sure your account still works for you in college.
Going off to college can significantly change your financial needs, especially if you’re not living at home, so you’ll need accounts that support your everyday financial activity and help you prepare for the future.
For most college students, this generally means opening two types of accounts:
Checking accounts
Checking accounts are ideal for day-to-day financial management. You use a checking account to manage your everyday expenses, including paying rent and bills, withdrawing cash from ATMs, and making everyday purchases using your debit card. Some financial institutions may offer student checking accounts with low (or no) monthly fees.
Savings accounts
Saving is important at any stage of life, and opening a savings account can put you on track to succeed. Savings accounts allow you to earn interest on the funds you deposit in the account, accelerating your savings over time.
Some financial institutions may also offer "hybrid" accounts that combine checking and savings, allowing you to manage all your money through one account. If you opt for this hybrid approach, you may or may not choose to open an additional checking or savings account.
As you consider different bank accounts, take note of how you’d prefer to manage your money and ensure the account you choose allows you to bank how you’d like. If you generally prefer to pay in cash, for example, you may want to select an account that will minimize your ATM fees. If you prefer to manage your money online, you may opt for an account that offers online and mobile banking.
2. Create — and stick to — a budget
Once you’ve opened the bank accounts you need, creating a budget should be next on your to-do list. Budgeting allows you to keep track of your income and expenses, giving each dollar a “job” to ensure you’re meeting your financial obligations and working toward your goals.
While budgeting is important for anyone, it can be especially helpful if you’re a student on a limited income. Your budget carves out space for all your basic living expenses, including your rent and utilities, which helps ensure you’ll have the money you need to cover these essentials. This means you’re more likely to be able to pay your bills on time and avoid taking on unwanted debt.
Ready to get started? Check out our student budgeting guide to learn how to create a budget that works for you.
3. Manage your credit responsibly
Going off to college comes with plenty of exciting life changes, including the potential to build your own credit history by getting your first credit card. If you’re interested in a credit card, look for student credit cards: they are generally accessible to students with no credit history and may even allow you to earn rewards on your purchases.
If you decide to get a card, it’s essential to use it responsibly. When used properly, a credit card can help build your credit history and raise your credit score, which may make it easier to access other types of credit — like an auto loan — later on. On the other hand, poor credit habits can lower your score, and accidental overspending may result in carrying high-interest debts that can be difficult to pay off.
Follow these tips to get the most benefits from your card:
- Make at least the minimum payment on time, every time. Missing or late payments negatively impact your score, so use your budget to help you stay on top of your credit card payments.
- Be mindful of your spending. Don’t spend more than you can comfortably pay off at the end of the billing cycle to avoid going into unwanted debt.
- Maintain a low balance on the card. Use only a small portion of your available credit (ideally, 10% or less) to help improve your credit score.
4. Start saving for the future
Saving is an important part of building financial security over time. But if you don’t have a structured savings plan — or you're relying on money left over at the end of the month to put into savings — you may never build up your nest egg.
Savvy budgeters pay themselves first. That means treating savings as an essential expense and creating a plan to save money at regular intervals. You might opt to save a flat amount each week or each month, for example, or set aside a percentage of your income on payday.
Building up your savings can provide financial security if you have an emergency, helping you to cover a surprise bill without going into debt. It can also lay the foundation for achieving longer-term financial goals by helping you build wealth from a young age.
Most savings accounts offer compound interest, which means you’ll earn interest on the amount you deposit into your savings account, as well as on any interest you’d earned previously. The longer your money sits in a savings account, the more interest you’ll earn and the more you’ll accelerate your savings.
The results can be dramatic. Even a modest savings goal — like depositing $20 per month in an account with a 2.5% interest rate — will add up to more than $1,000 by the time you graduate from a 4-year program. And if you continued to save $20 a month in your working years, you’d accumulate nearly $24,000 after 50 years, including nearly $12,000 in interest.
In addition to your ongoing savings plan, have a strategy in place to save a portion of lump-sum payments you receive. Pledging to set aside 30% of your tax refund, for example, can accelerate your savings to help you reach your goals.
5. Avoid impulse spending
Going off to college can be a source of financial peer pressure. You’re likely to meet people from all walks of life, including people who may have more discretionary income than you, and it’s normal to feel a push to keep up.
However, it’s important to stick to your financial plan and avoid impulse spending. Accidental overspending may mean you won’t have enough money to cover your essentials or may lead to you getting into unwanted debt.
Keep your spending in check by shopping with a list, which will help you avoid impulse purchases that might be out of your budget. Suggest free or low-cost activities, like potluck dinner parties rather than expensive dinners out, to keep your social spending in check. And build some “fun money” into your budget, so you can splurge in moderation to avoid feeling deprived.
6. Take steps to lower your expenses
Of course, it’s easier to manage your money when you have more of it available to use. So look for opportunities to save money on your everyday expenses. And, as a student, you’ve got plenty of opportunities to cut costs.
Try these tips to help:
- Use on-campus services: Find out which services are included in your tuition and fees and make the most of the resources available to you. Use the campus fitness center in place of a private gym, and visit student health services to learn about the vision, dental, and mental health care available to you.
- Take advantage of student discounts: Several retailers, apps, software, and services offer discounted rates, and local businesses may have partnerships with your school to offer student discounts.
- Save money on groceries: Plan your meals in advance and choose recipes that use similar ingredients to minimize waste. Shop with a grocery list, and stock your pantry with lower-cost staples — including grains, beans, lentils, frozen veggies, and cheaper cuts of meat, like chicken thighs — to meal prep on a budget.
- Shop second-hand: Seeking out thrift clothing, gently used furniture, and second-hand textbooks can all help you save money. Check your local thrift shops, classified ads, and student listings to find essentials at a discount.
7. Use digital tools to manage your money
It’s never been easier to manage your money anytime, from anywhere. Use online banking to keep track of your account balance, so you always know how much money you have available. In addition, set up automatic savings to move money from your checking account into your savings account at regular intervals to make saving more convenient.
Consider seeking out a mobile banking app with built-in budgeting tools, too. Some financial institutions allow you to build your budget directly within the app, as well as set up alerts when you’re low on cash or approaching your spending limit.
8. Get outside support
Managing your money can feel intimidating, especially when you’re first starting out. But you don’t need to do it alone.
If your parents have strong money management skills, suggest a “money talk.” Work together to create a realistic budget, set up your savings plan, and decide if you will receive financial support from your family — and if so, how much — throughout the year.
Consider looking outside your family for support, too. Student financial services may provide access to an advisor that can answer your questions and help you make sense of your finances. And your bank can also be a valuable resource to learn more about managing your money and find financial tools to help.
PNC is here to help
Good financial literacy can help you manage your money and plan for the future, and we’re here to support you on your journey. Visit My Finance Academy for articles, webinars, and other financial tools to help students and parents boost their financial IQ.
You’ll learn how to set savings goals, make your budget, and start investing to put yourself on track for financial success in college.
