Six Ways College Students Break Their Budgets

way college students break budget manage money

 

School supplies are hitting the shelves, and that means a new school year is just about one month away. College students head back to start their fall classes in August, so it’s time to focus on money management in college. Parents, if you are sending your children off to college, make sure they have the financial skills to get started on their own. College students, you need to read this! How many of these mistakes have you already made?

 

  1. The first way to break your budget is by not having a budget at all! So, take the time to make yourself a monthly budget. Consider the income you will get from financial aid, employment, and family. Estimate your monthly expenses for rent, food, and other bills. Make sure you have enough income to pay for all of these expenses. Don’t forget to leave a little padding in your monthly budget for the unexpected trip or opportunity. Try one of these budgeting apps to help.
  2. Grabbing a quick bite to eat or jolt of caffeine in between classes adds up over time. Grabbing a drink and snack at Starbucks can easily cost $10. Get in that habit three times a week, and you’ve spent $30. At the end of the month, you’ve spent $120. Pack some healthy snacks from home in your bag. Carry a refillable water bottle and try bringing coffee from home in a travel cup when possible.
  3. Consider the cost per meal of a meal plan. If you live on campus, you are stuck with the meal plan. You should have a choice, however, about how that meal plan is structured. Typically, you can choose a combination of meals and points or dining dollars. Look at the cost per meal of the plan and how many times you really eat in the dining hall. If you don’t use all of those meals each week, you’ll probably be better off with the dining dollars or points. If you do this, however, make sure to budget and keep track of this money so you are not left starving with a month left in the semester.
  4. Even social events need a budget. One of the great parts of the college experience is going out and having fun with new people. Going out, however, is expensive. Buying a new pair of shoes or jeans to go out adds to that expense. Unless your parents are giving you their credit card and an unlimited budget, you need to think about the cost of going out. Limit the number of days you go out (also a great plan since you need to study!), find things to do that don’t require spending money (Netflix and chill slumber party), and try shopping in a friend’s closet.
  5. While on the subject of social activities, be careful not to get involved with too many campus activities. There are so many new activities and groups to explore on campus, but they usually involve paying a fee for membership dues or group activities. Over the course of a year, these activity fees and expenses can add up to several hundred extra dollars that were not in your budget. All of these activities can really take away from your study time too. Limit yourself to one or two groups for at least the first year of college.
  6. Think about whether you really need to bring your car with you. Parking spots on campus can be very expensive, and many universities make you park your car a mile away from campus anyway. So, having a car can be both expensive and inconvenient. If your campus is part of a town or urban area, a car might not be necessary. Explore and consider the other transportation options before you decide to pack up your car. I went to college in Newark, Delaware and did not have my car with me until my final semester. The campus and town were very walkable, and trains and buses were available when we needed to get out of town. Plus, Uber is available in more locations all the time and makes it much easier to get around without your own car as needed.

Financial Literacy in College Students: Re-visited

college high school financial literacy education

Last year I wrote about a project my honors thesis student completed on the topic of financial literacy in business students. The hypothesis for the thesis was that business majors are more financially literate than non-business majors. On the surface, it seemed like it should be a simple answer. Business students are trained in the ways of accounting, finance, marketing, and management. Financial literacy should be a result of their education. Over 400 university students responded to a survey that included sixteen financial literacy questions from the JumpStart Coalition’s test. On average, students answered half of the questions correctly. Business students, however, did not do any better than the non-business students. As a finance professor, this was not a pleasant discovery. It turned out that only age and measures of financial experience resulted in higher financial literacy scores.

 

This year I had another student working on an honors thesis related to financial literacy. She, however, wanted to focus on high school education. Some states either require a high school course in personal finance or at least are exploring the idea. Given the poor results from last year’s study, we decided to take a different approach to measuring financial literacy. Financial education is not required in Mississippi high schools, but those that offer courses predominantly utilize the Ever-Fi financial education curriculum. So, we designed our financial literacy metrics from this curriculum. The Ever-Fi curriculum focuses on basic, personal finance applications that young adults are most likely to encounter within five years of high school graduation.

 

The good news is that according to these metrics, college students have a higher level of financial literacy than expected. Over 90% of students were able to answer most of the questions correctly. At least half of students were getting the correct answers to the most challenging questions. So, perhaps college business majors are more financially literate than the previous study indicated and the measure of financial literacy should be carefully considered.

 

Financial experience and finance education both resulted in higher financial literacy. Educating high school and college students about personal finance is extremely important to the economic health of our country. Curriculum, however, should focus on what students are most likely to encounter after graduation and incorporate applied learning opportunities.

Feeling Financially Illiterate? Four Tips to Get Smarter This Week.

source: freedigitalphotos.net
source: freedigitalphotos.net

 

Have you ever overheard a friend or colleague talking about investing or financial planning and realized that you weren’t exactly sure what they meant? Do you know you need to be saving for retirement but aren’t sure where or how? Are you not sure why interest rates are rising and what it means to you? Don’t feel too bad about it. I have a secret for you. Having a Ph.D. in finance doesn’t mean I know everything about personal finance either. I am always learning something new because the markets are always changing. The good thing is that there are so many ways to get a little smarter starting right now.

 

1. Subscribe to some great personal finance bloggers. Just check their qualifications before taking their advice.  Obviously, if you are here, you’ve found one of those blogs! If you click over to the About Me page, you can get some more information about why I am qualified to talk about personal finance and real estate topics. I have a Ph.D. in finance and am a tenured professor at a large state university. Some of my other favorite personal finance blogs are:

 

2. Take an online class. If you don’t need college credit, there are a few places where you can take classes on specific finance topics. Khan Academy has an outstanding finance and capital markets course. Coursera also offers free, online courses taught by university faculty. They have introductory finance courses available a couple of times a year.

 

3. Read a book. There are a lot of books out there about personal finance and investing. I don’t like to read boring textbooks any more than you do. I’m also pretty picky about authors with whom I want to spend more than a couple of pages. So, I feel pretty good about giving you these couple of book recommendations as a start.

On My Own Two Feet: A Modern Girl’s Guide to Personal Finance
Get a Financial Life: Personal Finance In Your Twenties and Thirties
Financially Fearless: The LearnVest Program for Taking Control of Your Money

 

4. Find some online tutorials. Answers to every question you have can be found somewhere on the Internet. Many finance web sites include great basic finance tutorials. I like Investopedia, the University of Arizona, and the Federal Deposit Insurance Corporation (FDIC).