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College Advisor
Nina Patel Certified Financial Planner Fall 2020

Money Management Guidelines for College Students

first house six years from now, you need to save
Money Management 101 $175 per month, for example (Hendricks).
According to Project on Student Debt, the SAVINGS TABLE
average college student graduates with $28,400
in debt (The Institute for College Access and Period Desired Goal Monthly Amount
Success). Many factors influence student debt 12 months $1,200 $100
levels, including changes in college costs, 40 months $5,000 $125
reductions in family and other support resources, 72 months $12,600 $175
and stagnant federal and state grants programs.
If you are like most college students, you are Budgeting
increasingly responsible for managing funds for The amount you plan to save each month must
tuition, books, food, housing, entertainment, and be realistic. How do you know whether your
other miscellaneous expenses. Learning to monthly savings goals will work for you? You
manage your money now establishes the habits develop a budget to track your income and
you need for future financial health. current funds and identify your expenses.
Money management means keeping track of the According to the U.S. Department of Labor, a
money you spend and receive. It also means well-designed budget allows you to eliminate
creating and following a financial plan for the wasteful spending while providing enough cash
future. Start by setting goals to determine what for you to pay for your most important expenses
you want to achieve this year (short-term goals), (Bureau of Labor Statistics).
what you want to achieve in 15 years (mid-term
goals), and what you want to achieve in five or
more years (long-term goals).

To meet those goals, you need to save money

each month. The following table displays three
scenarios.1 Suppose that a year from now, you
want to move into a more spacious apartment. If
the rent is $100 per month more than you pay
now, you need to save that $100 each month for
a year. If you want to buy a used car when you
graduate almost four years from now, you need To create a budget, list your monthly income
to save $125 per month for the next 40 months. sources, including wages from part-time jobs and
If you want to make a down payment on your allowances from parents. Also list your estimated
expenses for the month. (Use a spreadsheet or an
online worksheet to identify common expenses.)

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Each scenario requires a separate savings amount.
This file created specifically for HERMAN MAYFIELD

When creating a budget, observe the following
iron-clad rule of budgeting:
Expenses must never exceed income.
Balance your budget by comparing income to
expenses. The calculation is a simple subtraction,
as shown in the following sample (Federal Office
of Student Aid).
BALANCED BUDGET TABLE
Monthly Income $1,755
Monthly Expenses $1,715
Difference $40
Use your money first for rent, bills, and groceries.
Next, save the amount you identified to meet
your goals. If you have any money remaining, you
can carry it over to the next month or use it for
an unusual purchase or unexpected expense.
Tracking Cash Expenditures
Setting goals and creating a budget are your first
steps to managing your money. To make sure you
achieve and maintain financial health, you need
to track the cash you spend. Following are tips
from the Financial Planning Association (Reid 24):
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Avoid impulse purchases. Before buying
something, ask yourself whether you
really need or can afford it. Some people
avoid impulse purchases by shopping
only with cash, not a credit or debit card.
Check your balance. Look at your
checking or savings account frequently to
track your balances. Be sure to subtract
amounts for any checks you wrote or
withdrawals made with a debit card.
Watching your accounts online also helps
you detect potential identity theft.
However, use a personal computer or
mobile device to check balances, not a
public computer.
Use credit cards sparingly. Credit card
overuse by college students has
skyrocketed recently. In 2004, the
average college student had only $946 in
credit card debt. The average has soared
recently to about $10,000 in credit card
debt. Although the college years are a
good time to build credit for the future,
overextending your credit leads to
financial problems and limitations.
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Works Cited
Bureau of Labor Statistics. Economic News Release. Washington DC: U.S. Department of Labor, 2014.

Federal Office of Student Aid. Balance Your Budget. Washington DC, October 2019.

Hendricks, Jonathan. "Funadamentals of Money Management." Financial Planning Newsletter 7 April

2019: 4-5.

Reid, Martin. "Credit Card Health." Business Today (2019): 20-39. Print.

The Institute for College Access and Success. Project on Student Debt. November 2014. PDF. 14
September 2020.

This file created specifically for HERMAN MAYFIELD