One of the biggest keys to successful money management is to learn to live within your means. In our culture of instant gratification, it can be hard to distinguish wants from needs. At no time is this more difficult than during college. You are out on your own -- away from home, but with practically no money. Learning the skills behind money management can help you live within your means.
Make a budget.
This is a good time to learn how to budget. When it comes to money management, budgeting is one of the most important skills you can learn. As a college student, you are in a unique position. You are basically responsible for yourself, but you probably do not have a job that pays any sort of significant income. You need to start with a plan.
Try this: use one month to keep track of all of your expenses. Categorize each expense and look at how much you spent. Did you spend far too much on eating out or on clothes? It can be surprising how much you spend. That is why money management is so important.
Now that you know where your money is going, make a budget and be sure to weigh the difference between wants and needs. How much do you really need for groceries each month? You do need to have some fun, so budget enough to catch an occasional movie. Remember that this is not the stage of your life when you get to indulge. Instead focus on good money management and living within your means.
Be disciplined.
The easiest part is making the budget; the hardest part is sticking to it. Sticking to a budget is the most basic part of money management, however. Try some of these tricks to save money.
- Use your meal plan. Eat in the school cafeteria as much as possible.
- Cook in your kitchen. If you live off-campus, you may not have access to the school cafeteria, but you can cook in your apartment. Cooking your own meals is considerably less expensive than eating out.
- Buy used textbooks. There is no need to pay full price for college texts when they cost less used.
- Plan cheap entertainment. Instead of going out to a $9.00 movie each weekend, have movie nights in the dorm room. It is much cheaper and can be fun with a group of your friends.
- Use birthdays and holidays to ask your family for new clothing or gift certificates so you can buy any needed new clothing.
Having just a little bit of discipline can help you manage your money and live within your means.
Avoid credit cards.
College students get absolutely inundated with credit card applications. However, credit cards are not a very useful tool for money management. Instead of having to choose between wants and needs, credit cards deceive you into thinking that you can have both. If you do choose to get a credit card, use it for emergencies only and pay it off regularly. If you abuse it, it can damage your credit history and make it more difficult to get a loan after graduation.
Use student loans wisely.
Student loans can help a college student when it comes to money management. They typically have low interest rates, and subsidized Stafford loans do not make the borrower responsible for the interest on the loan until six months after graduation. Although the interest with unsubsidized Stafford loans adds up right away, you can make interest-only payments while in school to make the loan less expensive. Student loans can be used for tuition, books and living expenses. They are a tool to make money management a little easier. Just be sure to only use student loans to buy things that you truly need.
Discerning the difference between wants and needs is a great skill to learn. Mastering that distinction not only helps you with your money management while in college, but will continue to help you throughout your life.
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