Starting college is an exciting time for self-exploration and independence, but the financial stress that comes with it is often overlooked.
The reality is that college is expensive. Even after financial aid, scholarships, and grants are applied, you’re still left with everyday costs. Groceries, transportation, textbooks, housing extras, and social activities can add up quickly, and usually aren’t covered by aid packages. On top of that, some students may leave college with thousands of dollars in student loan debt.
From the moment you open your acceptance letter to the day you walk across the stage, and even post-graduation, our credit union experts are here with tools and real-world advice to help you feel confident about your finances.
In this article, you’ll learn how to manage your money, minimize your stress, and build habits that support your financial and emotional well-being!
Creating Healthy Money Habits
Once major expenses like tuition and housing are handled, the focus shifts to navigating college life. This often means managing money more independently than ever before.
For many students, college is their first time experiencing true independence, and while that freedom is exciting, it also comes with learning how to be financially responsible. Consider these tips to keep your finances on track.
Create a comfortable budget
A strong budget balances your wants and your needs. Start by identifying your essentials (food, transportation, and school supplies) versus your leisure spending (streaming services, eating out, and entertainment). Here’s an example:
- You are a college student making $13 an hour, working 20 hours a week. Your monthly income would be around $1,125 before taxes. Let’s list out the average essential and variable monthly expenses of a college student, outside of tuition and housing.
- Transportation: $100
- Groceries: $200
- Personal items (toiletries, hygiene, household items): $50
- Phone bill: $60
- Streaming services: $30
- Entertainment & social activities: $100
- Total = $540 a month on expenses
- $1,125 (income) - $540 (expenses) = $585 remaining each month
Keep track of any income from part-time jobs, internships, or freelance work so you know how much money is coming in each month. From there, use any remaining funds to save, put towards your larger college expenses, or whatever other financial goals you have in mind.
Remember! Your budget should be flexible. If there is something you desire, find a way to fit it into your budget while staying within your means.
Be smart with credit cards
In the U.S., you must be at least 18 years old to open a credit card, which makes college a popular time to get familiar with how they work. When used responsibly, credit cards build credit, earn you cash rewards, and help increase your chances of getting approved for cars, apartments, and more.
The key is moderation. Keep balances low, make timely payments, and only spend what you have.
Take advantage of student discounts
There are tons of exclusive offers and deals for college students in technology, food, clothing, entertainment, and even travel. In most cases, all you need is your student ID. UNiDAYS is a free, digital platform that provides students with deals for over 300 brands.
While small savings may not seem significant at first, they can reduce financial pressure over time. Plus, who doesn’t love a good deal? Sign up for UNiDAYS to see where you can save!
SAVING & INVESTING
If you’ve saved well for college up to this point, you don’t have to stop. And if you haven’t, it’s not too late to start. A 529 account is typically the savings vehicle used for education.
According to Indiana’s CollegeChoice 529, “the money in your 529 account can be used for any purpose. However, to qualify for federal tax-free withdrawals and avoid penalties, the money must be used for qualified higher education expenses for the beneficiary at an eligible educational institution...such as, tuition, computers, mandatory fees, books, supplies, and equipment required for enrollment or attendance; certain room and board costs if the beneficiary is enrolled at least half-time; and certain expenses for a special-needs student.”1
Conversely, it’s also important to become familiar with expenses that do not qualify for fee-free withdrawals. For instance, transportation costs and insurance premiums do not qualify.
Lastly about 529s, there is no age limit for an account, so it’s not just for children and any unused funds are typically transferable to other family members. That’s why, as your student begins college, you can keep on saving in an existing account or even start an account now.2
EARNING
If you have an expectation that your young adult should contribute educational expenses or costs of living on their own, it’s important to have that conversation as soon as possible. Sit down and have an in-depth discussion about what makes the best sense for your student. If they’re entrepreneurial in spirit, ask for their own creative ideas – maybe they want to offer tutoring within their strongest subject or open an Etsy shop to sell handmade items.
In addition, it may be helpful to talk about a comfortable budget to teach your student the importance of saving.
BORROWING
At this point, you probably know your child’s plans for this fall. If the cost of their education or training exceeds your savings and their financial aid package, you might need to look for other sources of private funding. That’s where Elements can come in. We have several different funding options for college and graduate students that fills the financial gap.
Contact Elements Financial for support of all your current financial needs — and congratulations to your student and your entire family! This is an exciting time. Embrace it, stay calm, and have confidence in your parenting – may they be good and ready for this next chapter, thanks to you.
