5 Steps to Manage Student Finances

1. Open a bank account. 

This may seem obvious but if you don't have one, you are going to have a tough time managing your finances. Start off with a checking and savings account.

2. Set financial goals.

Setting financial goals is a smart choice and can be very rewarding. Instead of wandering aimlessly, you have something to strive for and a clear path for getting there. To set financial goals, first define what your goals are. Write them down and set milestones along the way to help you achieve them. Prioritize your goals and put together a plan of action.

3. Create a budget

Creating and following a realistic budget helps you avoid making purchases you can't afford, missing payments or defaulting on your loans. These mistakes can hurt your credit history and therefore your ability to: rent an apartment, borrow to purchase a home or car, or most importantly, get a job. To create your personal budget, use our calculator.

4. Pay yourself first.

Making money – and spending it – can feel very rewarding. However, saving can help you reach many of your financial goals. From every paycheck, automatically deposit a set amount of money into your "emergency fund account" and your "regular savings account." Starting small is okay; you can always increase the amount in the future.

After paying your monthly bills, consider putting any extra money in your savings account immediately rather than waiting until the end of the month to see what is left over. This will prevent you from spending your extra cash on unnecessary purchases that can interfere with meeting your financial goals. . Compound interest helps you reach your goals faster.

The Impact of Compound Interest

Saving $1 a day

	No Interest	3% daily compounding	5% daily compounding
Year 1	$     365	$371	$374
Year 5	$ 1,825	$1,969	$2,073
Year 10	$ 3,650	$4,256	$4,735
Year 20	$ 7,300	$10,002	$12,542
Year 30	$10,950	$17,757	$25,413

 Saving $5 a day

	No Interest	3% daily compounding	5% daily compounding
Year 1	$1,825	$1,853	$1,871
Year 5	$9,125	$9,844	$10,366
Year 10	$18,250	$21,282	$23,676
Year 20	$36,500	$50,009	$62,710
Year 30	$54,750	$88,786	$127,065

5. Spend responsibly.

Small purchases can really add up. Take a look at the chart below. Try to minimize these types of costs - not only will you save money - you will also live a healthier lifestyle.

Item	Frequency	Cost Per Unit	Monthly Cost	Annual Cost
Coffee	5 x a week	$3	$60	$720
Takeout/Pizza	4 x a month	$15	$60	$720
Movies	2 x a month	$20	$40	$480
Vending machine snack	3 x a week	$1	$12	$144
		Total	$172	$2064

6. Don't overborrow. 

 

If you need to borrow, whether it is a student loan or a car loan, you need to make sure you are borrowing within your means. Read these strategies on responsible borrowing.