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August is here and that means that the fall semester is starting very soon for many colleges around the country. While students are prepared academically and have a general idea of what to expect, there are many who are going in blind when it comes to their own finances. For the first time, some students will have to responsible for their money and they may feel intimidated.
Many college students are surprised to see how easy it is to build a financial foundation for themselves. They expect it to be complicated and they think it'll will eat up a lot of their time, but it doesn't have t be that way.
Set Up Your Checking and Savings Account
If you haven't already, open a no fee checking and savings account. Compare the banks and credit unions in the area to see if you can get a great deal on your accounts. What accounts do you need? Here are three to get your started:
- Checking Account-This will handle all your bills and day to day spending.
- Savings Account– Bad things happen, even to college students. Have a small emergency fund in place for when it does.
- Graduation Fund– once you graduate, you'll need a small fund to help you move and start your first job. If you start early, you'll have four years for your money to grow.
You can add other goals and save accordingly, but I wanted to share the essentials with you. I found that if I automated my deposits into savings I was able to save a bit more rather than savings after all the bills were paid.
If you want a pain free way to build up your graduation fund is take any gifts from family and friends, scholarships money, etc and put 20% of it into the account. As long as you can pay your bills, have fun with the rest of the money.
Set Up Your Spending System
Most banks and credit unions offer free online bill pay. Take advantage of this feature and use it to simplify your finances. It will probably take you 30-40 minutes max to set up your bills. Once you set your online bill pay system up, though, it’s very easy to maintain.
We took copies of our bills and set them in a pile. I entered the bill names, addresses, due dates, account numbers, and bill amounts with our bank. You can set the bills up to be recurring, where it will pay it automatically for you. If a bill changes from month to month, I just login and change the amount. The bank takes care of the rest.
Believe or not, you don't have to buy budget software. There are free options for college student who are limited on funds such as Mint.
It's about setting a up a financial system that you can check once every pay period for 5 minutes. If you automate your bill payments and savings, you'll have more money in your pockets and more time on your hands to do the things that you enjoy.
Get a Job/Have an Income Stream
I'm not advocating working long hours and going to school. That's a recipe for you to become burned out by the end of the first semester. I'm encouraging you though to have your own source of income, besides anything you may receive from school or from your parents.
When you spend your hard earned money, it's different. I know this from my personal experience. I didn't spend my money so freely compared to other money I received.
Improving your monthly cash flow is also another goal with having an income stream. You can only cut expenses down so much, but you can increase your income by much more.
Besides the typical retail or fast food job, consider options like tutoring, freelance work with your talents, and selling items on Ebay. jobs like these can offer you a flexible schedule with higher hourly rates.
Photo Credit: Ed Yourdon