Step one: Get to know your money with a budget
You can’t manage what you don’t measure. Write down what you buy — it will help in evaluating whether a purchase is a need or a want. For example, school supplies and transportation costs may be “musts” while restaurant meals and other forms of entertainment are “wants.” And if you’re the rare student whose income exceeds what you’ll have to spend for needs and wants, consider establishing a savings account for that proverbial rainy day.
Budgeting is a learning process that takes practice. If you’re unsure on how much to spend on a well-deserved night out, refer to your list, evaluate potential upcoming expenses, and figure out if you actually have cash available to use. Helpful software and banking apps allow you to connect bank accounts and credit cards, and then they track all the activity that happens with each account. Use these resources to help build your budget, track spending and visualize your progress.
Some digital tools can even automate some important parts of your budgeting like depositing checks you might receive from a part-time job or your parents. You could also set up automatic billing to take care of payments for things like your cell phone or gym membership.
Apps may even benefit your budget by making it feel less awkward to ask for money. “Just 27% of people say they’re willing to ask a friend to pay them back for purchases under $10,” says Ravi Loganathan, head of digital and strategy at Zelle, an app for transferring money online, who shared the research from Zelle. “But if you’re a college student, every penny counts — even if you’re just splitting the cheapest pizza possible with your roommate.”
Where should your “goals” money go? Consider opening a savings account. “By opening a savings account, you can put away some money and you won't be tempted to spend it,” says Jake Lunduski, who graduated from college in 2016. “The money you saved up can be used to put toward your loans right after graduation.”
Dan Tash, a 2017 grad, suggests that students open several different savings accounts and label them. The names of the account should match what the money in them is for: Emergency Fund, for example.
“Set up automatic withdrawals from your checking to your savings accounts. Schedule that to happen on the same day as you get your paycheck if you're working while in school,” says Tash. “You'll be saving automatically without thinking about it.”