Many people treat college like a financial safety blanket, but it’s crucial to learn how to manage money as a student.
College is the real world. It comes with real experiences and real expenses. However, many adults refer to it as ‘Life in the ivory tower.’ That’s a very negative statement. What they mean is that life sort of presses pause when you’re on campus. That somehow life is easy and self-contained.
The truth is, many people do use college as a safety blanket. They use student loans so they don’t have to think about money. Instead of networking with professionals, they seclude themselves in their on-campus group of friends. Instead of thinking about the future, they only prepare for the next party. This is an improper college mindset. Few can argue. People go to college to create a better life after college.
With that said, I believe the proper college mindset is one where you attend college with your focus on the future.
What does your dream life look after college? Travel? An amazing career? A house on the beach? Focus on those goals. Work to achieve them. Life is expensive after college.
To meet just about any goal in life, you’ll need money, so you need to start learning how to manage money while you’re a student. Focus on getting a good career after school. This means choosing the right major, getting into the right organizations, and meeting professionals. Notice how I didn’t mention grades. That’s because, while grades are good, unless you’re going to graduate school, most employers won’t make a hiring decision based on whether you got an ‘A’ in underwater basket weaving when you were a freshman.
Don’t think I’m saying this because I’m holier than thou. In fact, I didn’t network nearly enough while in school. And I got really good grades but only realized after school that most employers don’t even pull transcripts! I still think grades are important (because anything you do, you should do well) but don’t focus on them.
Here is how you can become a college student money genius:
Build your credit while managing your money in college
Another wise decision while in college is to begin building your credit score. Get a no annual fee credit card and use it responsibly. My advice is to never carry a balance. Carrying a balance means interest. Interest means you have real debt. If you ever start to abuse the card, mail it to your parents’ house for safekeeping. Use it next semester when ordering books.
Use a convenient banking service
Get a bank or a credit union that has ATMs nationwide, which will make managing your money as a student easier if you move far away for a new job or internship. Try to get an account with some form of overdraft protection. You’ll be busy and it’s common for most students to overdraft a few times. Make sure there’s a free ATM on campus for when you need last-minute cash. Many banks and credit unions associated with colleges and universities offer student accounts with no minimums and lower fees. Make sure you shop around.
Know your student loans
A college student should also get a handle on their student loan debt. Most students could care less. At my school, the financial aid office said I came in more often than any other student. I think I came in maybe once a month with a question. You can make payments to your student loans while in college. If you need private student loans, shop around for the best rate. Lendkey is a private student loan marketplace that connects you with credit unions and community banks. The application process is quite simple too.
Think about life after college while managing money as a student
Let’s circle back to your future job. What do you want to do after school? You should decide ASAP so you can get some internships and jobs lined up. If you want to make a good income after school, it’s best to start early. Most successful people get a running start after college. I don’t hear too many stories of someone being a bum in their 20’s and then suddenly becoming a success. Remember, your plans don’t have to be perfect. It’s a learning experience. It takes years to become an overnight success. Life after college will throw many curveballs.
Getting started managing money as a student
I recommend getting started by taking inventory of your net worth. Yep – I want you to consider your net worth, even while in school. This will force you to look at your debt, income, and where you stand. It should only take one afternoon at most. Read how to calculate your net worth for more details.
Next, you should set some mid-range goals. This will give you something big to work towards. And it’ll also help with the job interview question, “Where do you see yourself in 5 years?” You won’t have to stumble and say, “Ummm married? Kids. House. Money. Yes. That stuff.”
Try to make time for reading books about life. I know, I know, they make you read a lot in college. But books about life (goals, planning, success, business) are priceless, and they’re an important part of managing your money as a student. Consider listening to audiobooks while you work out and run. They can be as motivating as rock music. A subscription to Audible can be an investment in your growth.
The Money Mindset
Having a proper money mindset takes time. And achieving success is intentional. I encourage you to cultivate your money mindset early in life. The earlier, the better. In my book, You Only Live Once: The Roadmap to Financial Wellness and a Purposeful Life (hardcopy or audiobook), I wrote how our money mindset impacts our financial decision-making. “A money mindset of abundance creates a positive relationship with money.”