Money Tips for Students that Make Good Cents
High school and college students make big decisions that can impact their futures, and oftentimes money is a part of that. In this article, you’ll learn a few personal finance tips for students that can set them up for success.
Set short-term and long-term goals
Setting goals can help with financial planning because you have to follow a plan if you want to reach that goal. Short-term can be anything you want to achieve in the next year or so and long-term is anything beyond that.
Short-term goals for students:
- Buying a used car
- Saving money to study abroad
- Purchasing books for next semester
Long-term goals for students:
- Moving to a new city post-grad
- Taking time to travel after graduation
Let’s say your short-term goal is to build your emergency savings to $500 by the end of the year. If there are six months left in the year, you divide 500 by 6 to get the amount you need to save every month to reach that goal. In this case, you would need to save $83.33 a month. As another example, if you have a long-term goal to save $5,000 to move to a new city in two years, you divide 5,000 by 24. To reach your goal, you would need to save $208.33 a month.
Set goals and create action steps so you can turn them into reality.
Have a goal to save for college? Read the complete guide on saving for a college education.
Create a budget
It can be difficult to know the kind of budget you need or how to begin, especially when you have limited income. But never fear — there are many options to choose from:
When you are a student with a part-time job, you may not be able to set aside 20% of every paycheck towards savings. And that’s okay!
The key is creating a budget or savings plan that works for you and then finding a strategy to carry it out. One solid strategy is paying your bills as soon as you get paid, even if they aren’t due for a few more weeks. This works for car payments, credit card payments, groceries, gas, and the other expenses that you can’t live without. If you tend to forget about recurring bills, you can schedule automatic payments or use Bill Pay so you’re always covered.
After your living expenses are paid, then you can work on setting aside some money for savings and fun. Even if you only save $25 a paycheck, that can add up over time.
When creating your budget, the biggest thing is to make sure you allocate enough money to cover your bills and then divide the rest between savings and fun. Happy budgeting!
Check your accounts often
Many young adults spend money without knowing how much they have in their accounts which can lead to overdrafts and their costly fees. To prevent that, you should monitor your accounts daily! Check your accounts easily from anywhere at any time using mobile banking and setting up alerts to show your available balance.
This is also a solid way to prevent fraud. If you notice suspicious activity on your account that wasn’t made by you, please reach out to the Fraud Squad so they can help you navigate your next steps. We want to make sure you can recover your money and time is of the essence to get it back so you’ll want to report an issue as soon as possible.
Be mindful of what you sign up for
Leaving for school or starting a new job can sometimes feel like the sky is the limit which can lead to saying yes to every opportunity like student loans, credit cards, and more debt. Always read the fine print of what you’re signing up for and when you’re ready to open a credit card and start building credit, find one with a lower interest rate (ideally under 20%). At Farmers & Merchants Bank, we offer a couple options for credit cards that are perfect for student needs. Call or stop by to talk about your options.
Most students need student loans to pay for college but be mindful of how much money you’re taking. Don’t borrow more than you need to cover tuition, room and board, meal plan, and your books. Instead, look for grants and other scholarships to cover these costs. Future you will thank you!
Lastly, look at the subscriptions you’ve signed up for like Netflix, Hulu, Disney+, Ipsy, Amazon Prime, Chewy, and Dollar Shave Club. Set a recurring reminder to do an audit every couple months and cancel the ones you don’t use or simply consolidate and ask for a family member or friend’s account information. It may only be a few dollars saved but that adds up over time!
As you venture out into the world after graduating high school or college, remember that we’re always here to help with those big financial decisions and we’re just a phone call away.