Real-Life Finances for College Students

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You have to have some sort of plan in place for the flow of your money, both in and out. You can't just spend until the bank tells you to stop. It doesn't work, and don't ask me how I know.

I know it's a real pain in the butt to keep track of your expenses, but it's really, really important to do that at least for a couple of months, to see where your money is being spent. Write down EVERYTHING! That snack from the vending machine, bus fare, pitchers of beer (you don't have to show your mom this list), everything.

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After keeping track of spending for a couple of months, it's time to place all of those expenditures (not such a big word; you're in college now) into categories. Here are most of the categories that you'll need:

Rent - how much do you pay each month for your housing?

Utilities - electricity, gas, water, garbage, phone and/or cell phone, cable TV, internet access.

Food - groceries, meals at restaurants, snacks from the vending machines, anything that you put into your mouth.

Auto - loan or lease payments, maintenance, repairs, parking, gas, that little air freshener thing that hangs from your rear-view mirror.

Insurance - any premiums that you pay for health, disability, dental, auto, and apartment. If you pay these quarterly or annually, divvie it up into monthly amounts for the sake of this exercise.

Education - (OMG!) tuition, books, lab fees, supplies, and student loans payments.

Entertainment - movies, parties, nightclubs, bus or taxi costs. This is where you put the beer tab.

Clothing - include dry cleaning and any repairs that you have to pay for.

Personal care - toiletries, haircuts. This may a good time to forego your gym membership and weekly massages.

Health - expenses not covered by insurance for office visits, treatment, prescriptions, and other medicines.

Credit card debt - if you carry a balance on your credit card(s), list the amount you pay off each month.

Miscellaneous - gifts, unanticipated small expenses, laundry. Be honest. If you spend money and can't find a place for it on the list above, this is the category. I tended to buy a lot of books for pleasure (see LIBRARY below).

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Now that you've got your expenses all listed and categorized, compare it with your monthly income (uh-oh).

If you have positive cash flow (you're making more than you spend), good deal. Start to pay off any debts and set up an account for savings, so you have a place to keep all of that dough.

If you have negative cash flow (you're spending more than you bring in), then you need to sit down and figure out what expenses can be whittled a bit. Even small savings can add up. Make you own fancy coffee at home instead of a daily Starbucks fix.

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It seems so easy. You fill out an application form, you're instantly approved even though you have zero credit history, and you can buy that great outfit you saw last week.

Don't fill out credit card applications just so you buy lunch or a new pair of shoes. It's SO tempting, but please do your best to resist.

If you do have a credit card, try to save it for emergencies. Emergencies do not include great shoe sales. Don't use your credit card to buy food. The food goes away, but the bill will still be waiting for you at the end of the month.

Credit card debt DOES have to be paid back. And if you can't pay it back, your credit score takes a real hit. Employers, landlords and insurance companies can and will check your credit score before hiring you, renting to you and insuring you.

If you can't pay your bills, creditors make your life miserable. You will be afraid to answer your phone and open your mail, because those companies WANT THEIR MONEY and will hound you to get it. Believe me, you DO NOT want to go there.

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Having a car is awesome! Having a car when you're away at college is even better. But the truth is, you can live without it. Really. Take the bus, bicycle, skateboard or walk to class. Even if you have somehow conned your parents to keep paying your car payments and insurance, gas will eat up your extra cash.

As a bonus, studies show that students with cars tend to have lower grades than those without.

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You can save a ton of money by splitting the cost of rent and possibly food. Just be sure to find someone with similar values. There may be a problem if you need total silence in order to study, but your roommate wants to play the bagpipes or invite over a dozen friends. Think about these things ahead of time.

Advice on choosing a roommate
College Roommate Etiquette Tips
Roommates and Money

Photo courtesy of Flickr and Peter Davis

You don't have to be a gourmet cook to survive in the kitchen. Learn some basic skills, like how to cook spaghetti.

Remember those vending machines too. The food in those things is not only expensive but also unhealthy. Walk away.

Textbooks are a huge expense. Save big money by buying used. Check out this bookseller for good prices on new and used books.

There is a lot of money out there if you can connect with it. You shouldn't ever have to pay for financial aid information. The web has lots of resources. Here are a few to help you get started.

FinAid
Financial Aid Finder
U.S. Department of Education - Explore Financial Aid
Financial Aid for College
College Board - Eligibility Calculator
Back to College

Use the library. You don't need to buy every book that you want to read.

Know your bank account balance. Please don't wait for the bank to contact you and tell you there's a problem.

However, we're all human. Just in case, get overdraft protection on your bank account. If you overdraw, the penalty can be tremendous, and your credit rating can suffer, as well. Overdraft protection gives you a little padding. Don't abuse it.

Pay your bills ON TIME. Late fees suck. They can be $50 or more down the drain for no good reason other than you forgot to pay your bill on time.

If you are going out for a night on the town, take a limited amount of cash and leave your credit card at home. Alcohol and credit cards are a BAD combination. Sometimes, friends and credit cards can also be a bad combination.