Preparing for Adult Finances: A College Student's Guide

Blog Highlights:

• Budgeting Basics for College Students: Learn how to track income, prioritize expenses, and create a budget that works for your lifestyle.

• Smart Saving Strategies: Discover the best savings account options and simple ways to start building financial security.

• Building Credit the Right Way: Understand how to use credit responsibly to establish a strong financial foundation for the future.
  

Being a college student and wanting to improve your finances is challenging. As you enter adulthood, there can be many questions about how to budget, handle finances, and save money while still being dedicated to your studies. Although students may tend to feel anxious about all of this, it’s a normal process that all young adults face.

Here are some steps you can take to help ease the stress of managing finances as a college student.

Follow These Financial Steps for Success

For many young adults, college is their first experience with managing money. Worrying about how to pay for school and bills can be stressful, especially if you don't feel prepared. However, with the right resources and tools, managing your finances as a college student is possible.

1. Create a Budget for Better Living

It’s important to track your income and expenses every month. This can help when creating a budget to better manage your finances. First, calculate your monthly income and identify all your monthly expenses such as rent, groceries, car insurance, etc. Then subtract your expenses from your income. When creating your budget, focus on the necessary expenses (basic needs) first to ensure you have enough money to pay for the things you need. Any money left over can be put aside in savings, used for going out, or for other fun activities.

2. Open a Savings Account and Save What You Can

It can be tough as a college student to find extra money to save when you're paying for school and other necessities. However, putting even just $10 into a savings account from each paycheck, can make a huge difference in the long run! Opening a savings account and setting aside whatever you can is extremely beneficial for many reasons, including saving for big future purchases or using it for emergencies.

Best Savings Accounts for College Students

There are many types of saving accounts to choose from, like a traditional savings account, money market account, or term share certificates (also called CDs). It’s important to research the ins and outs of each account so you have a better understanding of how each will benefit you and help grow your savings.

Here are a few examples of how a college student can benefit from each type of savings account.

• Traditional Savings Account¹: At CCCU, this type of account features a low $5 minimum balance requirement, no monthly fees, and earns interest monthly. It’s a great way to set money aside to pay for things for school or emergencies. 

• Money Market Account²: This account offers more earning power than a traditional savings. With competitively tiered rates, the more you save, the more you earn! It’s a great way to save for bigger short-term goals like a car, spring break vacation, or to kickstart advanced savings for your future.

• Term Share Certificates (also known as CDs)³: These give you the earning power of a money market but with a set timeline to save. You put extra savings into the account, choose a term – then set it and forget it! After the term is complete, you can cash out your savings, leave it, or get another CD. This is a great way to set money aside for your after-college needs like repaying student loans or getting an apartment.

3. Build Credit Responsibly to Create Future Opportunities

Building credit is one of the most important aspects to focus on when trying to figure out what financial decisions to make. A credit score is important for buying a house, rental applications, loan approvals, and could also impact the interest rates you’re going to have to pay in the future. If you build a good credit score, it could lead to better loan terms and lower interest rates. Having a credit card, and using that line of credit responsibly, is a good way to build credit. It may be intimidating at first, especially if you don’t know how to properly use it, but if you make sure to follow the credit utilization ratio of staying under 30% of your total credit limit, payoff your balance every month, and never skip a payment, you’ll be on track to building a positive credit score in no time.

As a college student, you can use a credit card for simple purchases like gas, groceries, or even school supplies. Making responsible purchases with a credit card can positively impact your credit score and your life when the time comes to make bigger purchases.

4. Take Advantage of Financial Resources

Since managing personal finances isn’t a required college course, asking an experienced professional for help and reading financial blogs are great ways to gain more knowledge about financial topics!

Don't be Nervous - CCCU is Here to Help

There’s a misconception that young adults should know what to do with their finances, how to manage them, and where to start but in reality, most are unsure. This can cause embarrassment and may hold people back from asking very important questions. However, there’s nothing wrong with asking questions and there are no wrong questions to ask. Not asking about important financial topics like budgeting, building credit responsibly, and saving for your future can risk hurting your finances and your future.

Ask a family member, or a friend, or seek advice from a trusted financial professional at your local credit union to start paving the path for your financial journey. At CCCU, we care about our members, their financial well-being and want them to achieve success. We’d love the opportunity to answer all of your financial questions and help point you in the right direction for achieving your financial goals! Contact us today to get started!