By Emily Luong, student @ UCLA
For a lot of us, college is our first time having to learn how to responsibly manage our money. All of a sudden, there are new costs to worry about: tuition, housing, food, textbooks, transportation, and personal spending. Balancing necessary expenses with “fun” expenses is something that many college students struggle with, so you’re not alone!
Here are some quick steps to ensure that you will be able to “treat yo self” once in awhile! With a little planning, you won’t have to be a broke college student 24/7.
1. Talk it out with your parents/guardians.
Part of being an adult is overcoming the fear of talking about money with family. Yes, many of us were raised to be wary of money, but opening lines of communication with parents/guardians and other loved ones is very important in managing your finances in college and beyond. Some things that should be discussed before you move into your dorm or apartment:
- Who is paying for college and how? Will your parents/guardians be paying for all of it, or do they expect you to chip in? Will you have to take out loans? Do they want you to apply for scholarships? Have you applied for financial aid through FAFSA?
- Will your parents/guardians co-sign with you on a credit card or list you as an authorized user on one of their accounts? Your young adult years are crucial to building credit (tune in soon for an in-depth article about this!).
- Will your parents/guardians be giving you a spending allowance or do they expect you to pay for your own “fun” budget?
- Will you be expected to work part-time during school?
2. Swap advice with friends.
Don’t just stop at family. Discussing finances with friends is also important! A lot of your peers are going through the same thing you are, so you can share advice and learn from each other. Maybe you’ve never had a job before, but your best friend has been working part-time since she was 16. Her experiences could be a great resource to draw from if you decide to work part-time during school! Some other things to consider:
- If you’re living with roommates, how will you split up the costs of rent and utilities?
- Will there be a designated grocery shopper?
- How about shared expenses like furniture and kitchen supplies?
3. Know and track your required expenses.
Clearly laying out the necessary costs of attending school and living on your own will help you have a better idea of how much you can allot for your “wants,” like concert tickets and eating out. Apps like Pluto can help with this! The app has an “Education” category for all things school-related, and it auto-categorizes specific merchants like Uber into the “Ride Share” category.
Here are some typical “needs” to consider:
- Food (meal plan and/or groceries)
- Textbooks and other supplies
- Utilities (if you live in an apartment)
- Transportation (Uber/Lyft, public transportation, car expenses/gas)
- Clothing (business casual and business professional gear for interviews and recruiting/networking events)
4. Track your discretionary spending and cut back on wasteful things.
With Pluto, you can clearly see where your money is going and set “Spend Less” challenges for different categories and/or merchants of your choosing. For example, if you spend an average of $60 on food and drinks, you can set a spending challenge to only spend $50 on food and drinks next month. That’s only two fewer Frappucinos... small wins add up! That way, you’re $10 closer to that summer backpacking trip with your friends without losing much in the process. Pluto visualizes this awesome tradeoff for you, automatically!
5. Think about your future.
This may sound dramatic, but it really isn’t. All this means is that you should be keeping your post-graduation financial goals in mind while creating your budget. Some tips:
- If you took out loans, remember that you will have to repay them. Saving money will help you in the long run; you don’t want to spend years repaying a loan after 4 years of spending lavishly. Consider putting aside a small amount per month to pay off interest as it accrues, while you’re still in school.
- If you can’t or don’t want to move back in with family after college, keep that in mind when making your discretionary spending budget. If you want to be able to live on your own post-graduation, you’ll need at least three months of rent/utilities saved up in case of job-hunting difficulties, so don’t overspend on “wants” in the moment.
- Build an emergency fund and don’t touch it unless absolutely necessary.
Everyone’s situation is different, but you can use these steps as a guideline to challenge yourself to be responsible with your money while still having fun! Before you know it, you’ll have achieved that sweet balance between spending and saving.