6 Budgeting Breakthroughs for College Students

Adapting to a new lifestyle is never easy, and when you're a college student living with a budget for the first time, it can be downright hard. According to a Harris Poll of 362 current and recent college students conducted online for Ally Bank, many students are using their college years to develop good personal finance habits, and have the right idea about saving for the future.

According to Anand Talwar, deposits and consumer strategy executive for Ally Bank, one good first step in managing personal finances while in college is to establish a budget early on.

Talwar outlined six key tips for college students to help them pass the real-life personal finance exam.

Make a budget and stick to it. Determine how much is needed for typical expenses such as transportation, utilities, meals and entertainment. For a generation that’s grown up with smartphones, one way budgeting can be made easier is to use the technology at their fingertips by setting up account alerts and reminders to pay bills on time.

Managing overall spending. The survey also found that the biggest financial surprise the majority (57 percent) of current and recent college students experienced while in college was just how much things cost. One way to manage those costs is to forego signing up for the plan with the most features—be it a cellphone, dining hall, cable, etc. Figure out what’s really needed versus wanted, then select the appropriate plan.

It's never too early to start saving. Three-quarters (75 percent) of current and recent college students said saving for the future should start before or during their college years. A majority (54 percent) said that saving should start before college, and another 21 percent said saving should start while in college. Talwar recommends seeking out savings accounts free from minimum deposit requirements and monthly maintenance fees that deliver competitive interest rates. Putting money aside on a regular basis can grow in time thanks to compound interest.

Plan (and save) for the unexpected. More than a third (35 percent) of current and recent college students said one of the biggest financial surprises they experienced while in college was having to pay for unexpected bills. It’s important to stash some cash in a savings account to cover unpredictable costs to prevent from having to use a credit card and risk building up potential debt. Consider the convenience of online banks, which tend to offer better savings rates.  

Find deals with a little work and imagination. Before buying anything or heading out to eat, check out sites like Groupon or Ebates. Also, don't just trash those unused gift cards. Some can be cashed in online. Plus, students may also find that a variety of off- and on-campus restaurants and other retailers offer a college ID discount.

Start now to establish good credit. If a credit card is needed, think about getting one with no annual fees and flexible rewards. Using a card for classroom expenses then paying off the balance monthly can be a good way to manage expenses, while establishing good credit for the future. According to the survey, college students are getting a head start on this, as well. More than 7 in 10 current or recent college students (72 percent) indicated they had a credit card while in college, and 69 percent of those with a card paid off the balance every billing cycle.

Source: Ally Bank