Personal Finance Management for College Students

College can be a liberating time for a lot of people, and there may be a tendency to throw caution (and personal finance management) to the wind. You're only young once. Might as well enjoy it, right? But not at the risk of your financial future. Now is the time to pave the way for an easy transition into the workforce by planning to enter it with as little debt as possible.

Now, with all that college students already have on their plates, managing their money may seem like nothing but a chore and an extra hassle. But it doesn't have to be that way. And the fact is, proper money management is integral for any college student wishing to avoid drowning in insurmountable debt after graduation.

A budget is an easy way to make sure that you have money available for both your needs - tuition, housing, meals, textbooks - and your wants - bar-hopping and night-clubbing, dating, music, movies, and fun. A college student's budget might include income sources like grants, scholarships, money from parents, student loans, and other forms of financial aid, and expenses like tuition and fees, books and supplies, housing, tutoring, various membership dues, laundry, hobbies and sports, trips home, and local transportation.

Plug these numbers into a spreadsheet and you'll probably discover that, like most college students, your expenses are higher than your income. Don't panic. That's normal.

One of the most effective ways to get this imbalance under control is to take a look at incidental expenses - those small nickel and dime expenses that seem harmless enough at the time but rapidly add up to a whopping chunk of your limited income. These incidentals include bus fare, giving spare change to a homeless person, a burger on the run, a beer after class, a late night pizza party, flowers for a crush, parking meter money, and other such costs that college students incur daily but rarely give a second thought to. Since you can't so easily cut down on housing, tuition, or textbooks, examining incidental expenses like these may help you find areas where you can cut costs here and there.

Automobile expenses, for one, can really rack up fast. Consider putting off getting that car (or bringing your existing vehicle with you to college) until after you graduate. You can get much more mileage out of your limited budget by walking, riding a bike, or taking the subway or bus to where you need to go.

Communication expenses can also accumulate with surprising rapidity in college, be it cell phone bills or land line long distance. Why not email your friends and family instead and save all that money for something better than a phone call, like a train ticket home for the holidays? Question how necessary having cable or satellite TV really is to you during these pivotal four years. With all the time you're spending studying and socializing, how much do you even need television programming to entertain you?

Now besides cutting down on incidental expenses, there are also a number of ways you can maximize the value you're getting out of being in college, for example, by taking the maximum allowable number of credits covered by your tuition. That way, you're not letting a dime of that hefty expense go to waste.

And though it may clash with your preconceptions of stylish college living, accepting on-campus housing is cheaper than living off campus, not only in housing costs but also in transportation costs. The same with eating - dine on campus instead of off and you're bound to save yourself a heap of money.

Peer pressure is one of the biggest detriments to your pocketbook in college. Emulating the spendthrift ways you see all around you simply in order to be popular or accepted (or to avoid being unpopular and rejected) is the quickest way to wind up in the poorhouse before you even graduate.

College is about finding your own individuality. Part of that is finding your own financial comfort zone - taking an honest look at what you're bringing in and what you're goals are - and then sticking to it. If you find that your desires are greater than your income, and you don't wish to sacrifice any more than you have to, then consider getting a part-time job after or between classes. Those are your choices in a nutshell - cut your expenses or increase your income, or both.

Don't get stuck in a position where you have to constantly borrow money from roommates or call home to ask for yet another handout to get your wants and needs met. And don't become just another statistic - a starving college student entering the workforce deep in debt. Instead, take charge of your money now by attending to simple personal financial management matters in your college years, and in the decades following graduation you will be thanking yourself for having done so.

Kenneth C. Kelly is the President of Strativia, a financial management software development and services company specializing in applications for personal and business use.  Strativia is the developer of Budget Forecaster, a sophisticated home budget and personal finance management software package.  Website: www.strativia.com. Contact: info@strativia.com.

Budgeting & Personal Finance

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