5 Ways How to Manage Money While in College
College is a time of impulse. Impulsive decisions plague college students with all the distractions of partying, shopping, socializing, etc… Managing money while in college is a challenge in itself, but it is not impossible. Here are a few tips on how to manage your money while in college.
1.) Have a Source of Income
If you do not already have a job, this is a good time to start looking for one. College is expensive, and it will become even more expensive if you do not have a source of income to support yourself. In order to put this into perspective, the average student loan debt for the class of 2016 is $37,172.
This is an extraordinary amount of money someone should have to pay for education, but it is the reality. If you do not want to fall into a financial trap, make sure to get a source of income. A popular way to make income while in college is to drive for Uber Eats or if you are 21, regular Uber.
I make most of my income trading forex, driving for Uber, and my part-time job in which I work roughly 20 hours a week at. I am in college myself and understand that working is a time-consuming activity. Driving for Uber Eats allows me to make my own schedule which is why I am trying to make that my main income along with Forex.
2.) Know Your Expenses
Knowing how much money is needed to keep yourself afloat is vital to everyone’s success financially. It is important to list out your guaranteed monthly expenses and estimating your other expenses. Listing out your expenses and income will provide yourself with a snapshot of your current financial situation.
The best way to do this is to use an online budget resource. I use the mobile app Mint, but here is an article that lists a few free others you can check out. I would definitely recommend using Mint as the interface is easy to understand and versatile. This will help track your monthly expenses.
Believe me, I have been there. It is a painful process to realize how much money is being spent inefficiently. Doing it is not going to be easy, but the reward will be worth it.
3.) Make More, Spend Less
Sounds simple, right? Limiting your expenses and maximizing revenue will allow for you to have more money while in college. Spending money left and right on impulsive items will leave you a poor person. Think rich, not poor.
At this point you should understand how much you need to make, now go make it and more. The more you make, the more you’ll have for the next step.
4.) Use The Leftover Money
Now that you have generated your income, paid your expenses, and have some money left over, it is time to put that money to work. I would suggest breaking up your paycheck into the following format:
Savings Account – 10%
This is probably the safest way of growing wealth. This is not exciting, but not risky either. It is important to keep some money liquid for the future.
Must Spend Account – 10%
The money you MUST spend when you get your paycheck. This is a fun account. College is about having fun, right? It will keep you on track and allow yourself the freedom to spend, leaving you satisfied. Restricting yourself from spending any money on yourself will make this process much harder, so this is arguably the most important account. Green light for you, go spend your money like the reckless college student you! Just limit it to 10%.
Stocks & Investments – 50%
Stocks and other investments are important if you want to continue to grow your wealth. I recommend buying the S&P 500 index fund on Stash.
Stash is an investment app that allows you to start investing with as little as $5 and gives you personalized investment recommendations based on your profile. Doing this will allow you to passively invest your money. This app is beneficial to college students who do not have the time or energy to research each investment, so Stash takes care of it for you. Use Stash as an automated way to invest your money and watch it grow!
Trading Account – 20%
Learn how to trade forex and use this money to buy another income stream. The forex lifestyle will give you a semi-active income. This means the income takes some work but is mostly passive. You can learn more about trading forex in my comprehensive trading guide.
Whatever Account – 10%
I personally leave 10% for my discretion. In reality, these percentages are guesses and do not reflect everyone’s individual needs. This is why I left 10% for whatever personally you think you will need. Some suggestions are to invest more, break it up between the accounts, or to put it towards a long-term purchase! Maybe you like traveling, great! Now put 10% a week away and save up for that next big trip of yours!
5.) Look for Ways to Save!
The next thing you wanna do is actively be looking for ways to save. Do you see that toothpaste that is 50% off? Buy 10 of them! This is an instant return on your money and you’ll need it anyway. Better to buy it in bulk and have it instead of buying it periodically and wasting money.
I would also highly suggest getting a cash back credit card. College students fear credit cards due to the stories they hear growing up of what can happen. Banks also know that college students like to spend A LOT and are willing to give students credit cards with ridiculous terms. For this reason, you should not be using your college card as a credit card, but as a debit card. You will want to pay off the FULL balance every month in order to get maximum savings, otherwise, you will have a lot of interest payments. Discover offers student cards with a 5% cash back on rolling categories and unlimited 1% cash back. This is free money back so go use it!
You can also look into refinancing. If you have an auto loan, chances are the interest rate could be MUCH lower. Look online for other places that are willing to give you better rates on your auto loan and try and save. I use CreditKarma as a way to look at different credit cards and refinancing.
You’ll want to be persistent with tracking your finances while in college. It is not easy to save money with all the marketing techniques that large corporations market to college students like yourself, but be aware of them. This will allow you to unlock financial freedom and never worry about debt again!