College Budgeting: First Semester Financial Goals
Going off to college is an exciting time! But for many first-year college students, it’s their first opportunity having some autonomy over their finances. Therefore, it’s important to set some first-semester financial goals to start your college budgeting on the right foot and set yourself up for financial success.
Learning to Budget
Budgeting is one of the most important financial skills for college students to learn, and first semester is the best time to start. Budgeting doesn’t have to be complicated, especially for college students who likely don’t have many streams of income or monthly expenses. It’s simply comparing what’s coming in each month to what’s going out. For first-semester students, your income is likely coming from parents and family members and/or part-time jobs. In addition to any educational expenses you’re taking on yourself, you’ll also have to factor in food, entertainment, transportation, and any other costs. Tracking your income and expenses can be as simple as writing it down or keeping a spreadsheet.
A number of budgeting apps also exist if, like many college students, you’re most comfortable accomplishing things on your phone. Getting a handle on budgeting as a first-semester college student when your financial situation is relatively simple will help set you up with sound habits for your future when your budgeting process becomes more complex.
Tracking spending is an important part of the budgeting process for college students. In today’s world, keeping track of your transactions is easier than ever. Debit and credit cards allow you online and mobile access to view your card activity instantly. Get in the habit of checking these regularly. Many cards also allow you to set alerts when transactions are processed or when your balance reaches a certain amount. Apps such as LearnVest and Mint also offer user-friendly interfaces to help you track your spending in a simple and visually appealing way. Some apps will also sort your transactions into categories. This can help you better understand your budget and where you’re spending the most. This can allow you to visualize where you may be able to cut back on your spending.
And of course, there’s always the old school method of using cash to track your spending. Consider taking out a certain amount from the ATM for the week and then using only cash for your expenses. This will allow you to visually see how much you’re spending and may dissuade you from overspending. This can be an effective budgeting technique for college students.
It is beneficial to start building credit as early as possible so that by the time of graduation banks will have a credit history to look at and will be more likely to provide loans and other services. Building up credit as part of your college budgeting process allows students to be more prepared for their young adult life because it will be easier for them to rent their first house or apartment and, later on, make larger purchases such as a new car or a first home. Additionally, you’ll qualify for the best terms when getting personal loans or opening credit cards.
To start building credit, make sure to spend only what you can afford to pay back. Additionally, it’s crucial to make your payments on time all the time. This will also set a good habit for the rest of your life. An alternative to opening a credit card right away could be joining a parent’s credit card as an authorized user. However, this should only be done if the parent has a good credit score and sound habits. Having bills in your name can also help build a credit history. Cosigning a car loan or paying rent to a landlord are great options to build credit, as long as they are being paid on time.
As a first-semester college student, budgeting will be crucial in building strong financial habits. Learning to budget, tracking your spending and building your credit are all important steps to take as early as possible to get your college years off on the right foot.
For credit card tips for college students, contact the credit card debt professionals at Tayne Law Group!