College students have to manage coursework, extracurricular activities, housing and on top of that, their finances. Here are some tips from Phil Schuman, IU’s director of financial literacy, to create healthy financial habits.
Build a budget
Setting up a budget is the most important tip he gives students, Schuman said. Maintaining a budget allows for consistency, which can control impulse purchases. It also keeps people accountable for what they spend their money on.
Schuman said many people use Excel spreadsheets to budget, but there are also different apps that can help.
Schuman said once people know how much money they earn every month, they should start budgeting for necessities such as rent, utilities and food. He said to put some of the leftover money away to build an emergency fund, pay off student loans or even save for retirement.
Anything left over can be spent for leisure, such as clothes or going out with friends. He said everyone needs money to buy things that make them happy.
Schuman said he doesn’t have exact numbers or percentages for how much money to spend in different categories because everyone’s situations are different. However, the most important thing is to spend consistently.
Start building an emergency fund
Everyone should have an emergency fund in case unexpected expenses come up. Schuman said this could mean losing a scholarship and having to make up the difference or getting injured and having to pay medical bills.
These types of situations can easily get people into debt if they’re not prepared, Schuman said.
A portion of earnings should be saved for an emergency fund each month.
Don’t rush to build credit
Schuman said students shouldn’t need to worry too much about building credit. He said it’s more important for students to create good financial habits. Some people may be tempted to take out unnecessary loans to achieve a good credit score, since 10% of a credit score is based on having a variety of different loans or credit cards, he said.
Schedule an appointment with MoneySmarts
Schuman recommends making an appointment with MoneySmarts for more customized financial advice. This can be done online, and its website has articles on topics such as financial aid, transportation and investment.
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