College Student Money Management: From the Ivy League to the Big League

College student money management presupposes that you are where you are and there is no turning back now. Either your parents put money in a state 529 plan or other prepaid college plan, or they didn't. Whatever your source of income, you need to manage it well. Otherwise, you may find yourself hitchhiking home in the middle of your sophomore year.

First of all, a word of caution. Now that you are a college student on your way to increasing your earning potential, you will undoubtedly get all kinds of offers from the major credit card companies trying to woo you into starting to make a good name for yourself. Don't fall for it. These companies are not concerned with helping college students manage their money. The fact is, you will have plenty of time and opportunities to establish your credit. Jumping on board the credit card express early in your life is almost a sure track to financial woes later on.

Your financial aid office should be able to help determine what your expenses will be as a student of whatever institution you are attending. Knowing this will help you to minimize your student loan borrowing. That being said, there are many ways to reduce your expenses on and off campus that will put you under even their best estimate.

Managing your money as a college student sometimes requires you to give up certain luxuries. I will always remember what the financial adviser in my husband's graduate school counseled: Live like a king now, live like a pauper later; live like a pauper now, live like a king the rest of your life. Or something like that. In other words, pack your lunch. Buy your books at the used book exchange, on the Amazon Marketplace, or at Half.com. (Abebooks.com is also a great place to buy text books. Not only are they cheap but, there are many international editions as well. You can get the same book--usually soft covers--brand new for a quarter of the price). Leave your car at home. You will save a ton on gas, maintenance, and insurance. Use your cell phone wisely--especially when it comes to text-messaging. Oh--and get a roommate. You would be surprised at how many people avoid doing this out of not wanting to be inconvenienced. Prudent college student money management dictates otherwise.

If you are stuck having to take out student loans, you can use college student money management on them, too. Try to use your student loans for tuition, fees, and books only. That way, you will be way ahead of the game when you go to pay them off. And if that means getting a job to cover your living expenses without interfering with your study time, so be it. You might even get some valuable on-the-job-training in the field you are studying. For instance, since I am also a musician (my degree is in music therapy), I taught private music lessons and played in pit orchestras for extra money.

One of the best jobs that I ever had, though, was as a paper carrier. (Okay, you will need a car for this one--but you can justify the expense since it will pay your bills). For about an hour and a half everyday--yes, including weekends--I earned enough to pay my rent and my utilities and still have a little left over to put aside. There are other jobs that don't require you to get up quite so early of course, but the key is to find something that pays well for the least amount of time. You could also consider a dorm-based business of some sort. But be careful--there is a lot of junk out there.

Let's talk more about college student money management as it applies to the money you earn (or are given if your daddy own a Las Vegas Hotel/Casino). We have already said that this money should go toward living expenses, fun, and savings, but in what proportions?

Now is the time to set up 3 or 4 separate checking accounts at your local bank. One of them will be your Live account. This is where 70% of your income will go. If you like, you can break these down into a more traditional budget format. See Budgeting for College Students for help with this.

Then you will have your Save account, for another 10%. Put 10% in your Fun account. Then you can either put the remaining 10% into your Give account or you can divide it up between the Save and the Fun account. There is something to be said about having money to give to someone who needs it more than you, though.

There will be times, of course, that you are given a gift or a grant or something like that. The temptation will be to have some extra fun with it. Why not save it all instead? You might find that the decision to go to graduate school is made a little easier if you have some money stashed away.

So to recap college student money management:
Student loans=tuition, fees, and books
Job/business=living expenses, savings, fun, and give (optional)

Oh, and one more thing. If you have to move home for a year and go to school close to where your parents live, it is not the end of the world. There is nothing wrong with being financially responsible at this time in your life. You will emerge better prepared from the experience, I promise. Your parents will be less stressed, too, since they are the ones that are helping you the most anyway.

Well, that about wraps up the topic of college student money management. Just remember that while you are a college student can be a great time to practice your money management skills before you are making the big bucks. Learning these lessons now will pay huge dividends for the rest of your life.

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