College provides students a chance to develop budgeting habits to use when they move off campus and for the rest of their lives. Phil Schuman, the director of financial literacy for IU MoneySmarts said this time can serve as "training wheels."
“Then, when you graduate, you’ll have it figured out,” he said.
One of the first decisions students must make when moving off campus is where to live and who to live with.
Schuman said when choosing housing, it’s best to avoid getting sucked into living at expensive apartment complexes just because they have amenities such as a gym or pool. Many of these amenities are already available to students on campus, even if they’re not as conveniently located.
Schuman also said students should, if possible, sign a lease that does not make each signer responsible for the total cost of rent. Some leases make signers only responsible for their portion of rent.
Most leases, though, do make all signers responsible for the totality of rent, so Schuman said students should choose only roommates they trust to pay their share of expenses.
To mitigate the discomfort of talking about finances, Schuman recommends scheduling a meeting with roommates at the beginning of the semester and regularly after that to discuss expenses. A scheduled meeting can avoid making people feel caught off guard or act defensively.
“Have a conversation with your roommates upfront about who is responsible for what, even toilet paper,” Schuman said. “It seems kind of trivial, but it will ultimately save you a lot of stress in the long run.”
When students move off campus, another major adjustment comes from the responsibility of buying and preparing food. Peter Dunn, a personal finance expert who works from the Indianapolis area, said having a set weekly budget for groceries can help students avoid overspending on food.
“When you’re on your own for the first few years of life, it’s so easy to get out of control with food,” Dunn said. “You’re trying to learn self-control when it comes to food and healthy eating.”
Dunn also said one of the biggest mistakes students can make is trying to replicate the lifestyle they had while living at home, where their family likely had at least one stable income, if not two.
Because most students have a small income or none at all, Dunn said one strategy for saving money is picking one “vice” to splurge on such as good coffee or beer and finding the cheapest options for everything else on one’s list.
One of the biggest money-sucks for students can be eating out. Schuman said that while eating at home for every meal is the smartest financial decision, budgeting for a meal or two out each week will help students feel more content than if they try to avoid it completely.
Schuman also said people often underestimate how much time and effort goes into making one’s every meal, so it can be helpful to set aside time once a week to plan what one will eat for the next week.
“Figure out exactly what you need to do,” Schuman said. “Do what makes the most sense, but don’t completely deprive yourself.”
Schuman also said that whatever lifestyle a student has during college sets the tone for their lifestyle after college. If they’re used to nice furniture and eating out, for example, Schuman said they will likely come to expect those things, even if their income doesn’t necessarily justify it.
“Whatever place you live in, it becomes your baseline for where you live next,” Schuman said. “Temper your expectations now and set yourself up for a better financial future after you graduate.”
More resources can be found on the MoneySmarts website at moneysmarts.iu.edu and the office also offers one-on-one meetings with students to help them with any financial questions or concerns.
