"If a college student has any doubts about whether they can handle the responsibility of a credit card, then they should not have one, period."
College brings on a slew of new challenges for students, many of which they’ve never faced before. In addition to balancing their busy schedules and living on their own, students need to learn how to manage their finances properly.
We caught up with Andrew Schrage, co-owner of Money Crashers Personal Finance (voted one of the top 10 personal finance sites by Kiplinger), to get some tips and tricks for handling textbook costs, student loans and other college expenses. Find out what he has to say about successful budgeting during your college years and how to boost your income during school.
What advice do you have for college students who are creating a budget for the first time?
Andrew Schrage: “The first step to creating a personal budget is to accurately record all annual income, notating when you expect it to come in. This includes parental financial assistance, grants, loans, scholarships, and any personal income, and should be listed in the "income" section of your budget.
Next, be sure to list all fixed expenses, such as tuition costs, utility bills, monthly rent, and cell phone bills. Estimate monthly expenses for variable costs such as food, entertainment, and textbooks, and factor in a little extra on the expense side for emergencies that may arise. From there, it's just a matter of determining how to keep monthly expenses less than your income.”
What are some of the things that students might forget to factor into their budget?
AS: “One thing college students often fail include in their budget is a prorated amount each month for annual expenses, such as auto insurance premiums.”
What are your do's and don'ts for credit cards in college?
AS: “If a college student has any doubts about whether they can handle the responsibility of a credit card, then they should not have one, period. They can instead pay cash for all purchases to avoid the temptation to overspend.”
How can students avoid damaging their credit during college?
AS:The best way a student can avoid damaging their credit during college is to pay all monthly bills on time and in full. Also, avoid carrying any credit card balances.
What are some common financial mistakes that college students should be careful to avoid?
AS: “The biggest mistake college students can make is to think that just because they're financing their education with student loans they can spend money without consequence. College students should do everything in their power to reduce what they spend while in school, including saving on college textbooks, taking advantage of free entertainment options, and asking for a student discount when making their everyday purchases.”
What tips do you have for students that are struggling to get by?
AS: “Look for ways to generate more income - for instance, taking a part-time job is a great way to start. You can also sell unneeded items on the Internet, such as electronic gadgets and textbooks. You can even fill out paid online surveys to generate a few extra dollars. It won't earn you a fortune, but could still be a good way to boost your income.”
With these tips from Andrew Schrage, students can get a great start on money management during their college years. Want to learn more about budgeting for your tuition? Check out our guide on how to pay for college.