Money Management: One of the Most Critical Skills for College Students

Good money management habits are an essential part of being an independent adult. Not only is money a finite resource that you have to invest time earning, but it’s also what allows you the flexibility and independence to live the lifestyle that you want. It provides security for your future in case of unexpected circumstances. Money management is a skill you can begin building as a young adult and master before starting out on your own. It’s a critical skill for college students. Here’s why:

Investing in Your Future

If you work while completing college, you’ll want to put part of that away for the future. While many of your college expenses are covered by loans or scholarships, that safety net will run out by graduation and you’ll need to begin paying those loans back. Setting aside part of your income for student loans will help save you money on accrued interest. You may also aspire to move into your own place or purchase a car upon graduating. In either case, some tips for saving money during college include sticking to a budget, utilizing free university resources such as the library, and looking into cost-saving options like renting versus buying textbooks.

Making Sure You Have What You Need

It’s hard to say no to small inexpensive things that you know will bring you immediate gratification, but sticking to a budget requires exactly that. Budgeting for needs and savings first helps people organize their personal finances so their money works for them. Setting aside funding to pay your living expenses such as rent, food, gas, utilities, and tuition obviously comes before any recreational or leisure spending such as travel plans with friends, booze, or going out for fun.

Bad Habits Are Hard to Break

Good habits, like building savings, will stay with you for the rest of your life. Bad habits that aren’t curbed immediately will become ingrained into your routine. Common money mismanagement habits for college students include not keeping track of what they spend their money on, not recognizing wants versus needs, and taking out student loans for nonessentials. Build good habits like being able to say no to peer pressure, living frugally, and not giving in to the temptation of credit cards now to ensure you have a solid foundation of financial knowledge for the future.

College is a great growth period for young adults as they transition into independence. Not only are they working towards educational goals, but they’re balancing that with general life skills like budgeting and planning. It’s important for college students to build solid financial knowledge and good habits early such as saving for the future to prevent setbacks later. It’s also a good practice to invest for future goals like independent living or buying a car and plan for emergencies or rainy days.