One of the biggest adjustments you have to make when you’re entering college is learning how to manage your money away from the security of Mom and Dad’s wallet. After all, living expenses add up—but they’re easy to ignore when your parents are footing the bill.
But no more. You’re on your own now! Which is why, in this latest installment of our College Student’s Guide to Living on Your Own, we’ll show you how to balance your budget, trim your expenses, and establish habits that’ll keep you on sound financial ground from now until well into your future.
Here are some simple ways to get started that still guarantee you have plenty of cash for fun, too.
Start by setting a budget
“College is a time when it’s particularly easy to overspend, and many students may not have jobs to finance lifestyle expenses and therefore end up using student loans to cover the shortfall,” says Erin Lowry, author of “Broke Millennial: Stop Scraping By and Get Your Financial Life Together.”
You can assess your cashflow using Mint, a free mobile app that helps you track your spending by linking your financial accounts such as credit and debit cards. Once Mint collects this data, the app suggests a monthly spending limit for each category based on your spending history. It also helps you set financial goals.
Separate wants from needs
To avoid overspending, you have to distinguish wants from needs. Needs are required expenses such as rent, utilities, transportation, and groceries. Wants are discretionary expenses like entertainment, travel, shopping, and dining out—including those addictive $5 lattes from Starbucks.
To be an effective money manager, you’ll need to prioritize your spending. Many financial advisers recommend following the 50/30/20 budget, where you spend 50% on needs, 30% on wants, and 20% on savings and paying off debt.
Find affordable housing
Generally, you should spend only up to 30% of your income on housing. But a more comfortable number may be closer to 20% or 25% when you factor in college expenses like textbooks and school supplies and extracurricular activities.
Bear in mind, you don’t have to live in a luxury apartment when you’re a college student. You should find a rental that fits with your budget. Living with a roommate can help subsidize how much you’re spending on rent every month.
Trim your bills at home
There are some simple ways you can lower your monthly housing bills. These practices include the following:
- Instead of cranking up the AC, run ceiling fans. Ceiling fans can help keep cool air circulating through your home, and running them costs less than running the air conditioning on full blast.
- Lower your water heater temperature to 120 degrees. A heater set to 140 degrees Fahrenheit or higher can waste anywhere from $36 to $61 annually in standby heat losses, according to the Environmental Protection Agency.
- Cover your windows with solar shades or curtains. These help keep the sun from heating up your home.
Lower internet and cable expenses
The average annual bill for TV service rose from $700 in 2000 to $1,200 in 2017, according to research firm Kagan, S&P Global Market Intelligence. To trim this cost, consider cutting the cord and switching to streaming services such as Amazon Prime Video ($11 a month), Hulu ($8 a month), or Netflix ($8 a month).
Another option is to get an old-fashioned antenna ($23 on Amazon) to watch broadcast channels such as ABC, CBS, Fox, NBC, PBS, and Telemundo. There are also cable-replacement services such as DirecTV Now, Hulu With Live TV, and YouTube TV, which cost anywhere from $20 to $70 a month, according to Consumer Reports.
Avoid paying full price for textbooks
The average college student spends a whopping $607 a year on textbooks and course materials, according to a recent survey from independent research firm Student Monitor. But there are cheaper alternatives. Digital textbooks are generally less expensive than printed textbooks. Students can also purchase used textbooks on websites such as Chegg or Amazon, or rent textbooks on websites such as DealOz or CampusBooks.
Pick up a part-time job
Want more money in your bank account? Get a part-time job while in you’re school. In fact, 52% of college students work at least 27 weeks a year, according to a study from apartment search service ABODO.
Ideally, you want to find a job that offers flexible hours (e.g., baby-sitting and tutoring) so that you can still focus on your studies. There’s also the Federal Work-Study Program, which offers part-time employment while you’re enrolled in school to help pay education expenses.
Use credit wisely
According to Sallie Mae’s “Majoring in Money” report, 56% of undergraduate students owned a credit card in 2016, up from 30% in 2013. But racking up credit card debt can hurt your credit score and make it more difficult for you to eventually qualify for a mortgage and buy a house down the road. So, make sure to also read our college student’s guide to credit cards, too.
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