Be Money Smart at College

Being money-smart starts with basic financial planning. Follow these guidelines to set yourself up for success in college – and for lifelong financial well-being.

Create a budget

Creating and sticking to a budget doesn’t have to be difficult. Know your income, plan for your needs, and track your expenses.

• Income: Know where your money is going to come from (home, financial aid, a part-time job) and when it will be available (at the beginning of each semester, once a month, or every week.) Do not spend more than your income.
• Needs and wants: Know the difference, and cover the needs before wants. For instance, when considering expenses, buying groceries or eating in the cafeteria is a need, while eating out at a restaurant is a want.
• Planning ahead: Prepare for big expenses (such as books and transportation back home) by setting aside money on a regular basis. Of, if you only get your income once a semester or once a month, set money aside at that time before budgeting for your normal weekly expenses.
• Tracking expenses: Keep track of where your money is going – using a spreadsheet, an online tool like BUDGETS in Patelco Online™, or simple pencil-and-paper. Make adjustments to your budget if needed, and remember that spending more in one area means spending less in another.

Open a checking and savings account

The right checking account can help you manage your money conveniently and securely. Look for an account that offers:

• No fees, like Patelco’s Free Checking account
• A debit card to access your money
• online banking and a mobile app
• overdraft protection

To avoid overdrawing your account, it’s essential to keep on top of your balance, which is easy to do with online banking and mobile apps.

Open a savings account at the same time. A savings account is a great place to budget for larger expenses. Saving additional money regularly, however big or small, can add up over time to help you prepare for unexpected expenses too.

Start building credit

Apply for a student credit card – and then use it wisely. Having a credit card in college has two distinct benefits: it gives you extra security in case of a financial emergency and helps build a good credit history (when used properly).

Having a good credit score is important because it will help you get an apartment and make borrowing cheaper for larger purchases like a car or a home. Many employers also check credit scores when hiring – so it could help you get a job too.

To build your credit responsibly:

• Choose a card with a low interest rate and no fees – don’t be tempted by a card just because it comes with a free t-shirt or other gift
• Get only one credit card
• Use the card for regular expenses that you can pay off monthly, like your cell phone bill, groceries, and gas
• Pay the balance off each month
• Get a low credit limit to keep your credit balance down
• Make your credit card payment on time each month — late payments may be reported to credit bureaus, which will impact your credit score and make borrowing more expensive for you later
• Avoid cash advances – they have high interest rates and fees
• Don’t let others use your card – you’re responsible for all charges to your card

If you can’t pay off the card one month, revise your budget and cut expenses to pay off the balance as soon as you can. And if you find you’re not being responsible with the card, close it. (Don’t worry – you can still make payments on your balance after closing a card.)

If you’re 21 or older, you can apply for a credit card on your own. Otherwise, you’ll need another adult, such as a parent, to cosign for the credit card application. (This makes the parent responsible for any unpaid debt and can impact their credit score if the card is not managed properly.)

Source: Broadridge Financial Solutions, accessed June 14, 2019.