Top 4 Money Management Skills Every College Student Should Know

College is difficult financially for students, which is why you need basic money management skills to get through it with the least amount of debt possible. This includes learning how to budget, getting financial aid and loans, and understanding how interest works. Take a closer look at these top money management skills every college student should know.

Learn the Difference Between a “Need” and a “Want”

Image via Flickr by Chrissy Hunt

Up until college, parents are responsible for giving their children the things they need, which is why many college students haven’t learned the difference between a “need” and a “want.” The only things you truly need are food, clothing, and shelter. And, that doesn’t mean these things need to be extravagant. As a college student, you should learn to eat frugally, buy cheap clothing (only when needed), and find an affordable place to live that meets your needs but is not excessive.

Learn to Live on a Budget

Unless your parents are going to pay for your entire college experience, you’ll probably have to get a job and learn how to live on a budget. The college years are particularly difficult financially because you have to pay for tuition, books, and living expenses, all on a low-paying job. Yes, your efforts will pay off when you graduate and get a higher paying job, but the finances are definitely a challenge while you’re still in school. Living on a budget is an important money management skill for college students to learn. Plus, it will help you throughout the rest of life.

Understand How Loans and Financial Aid Work

One important money management skill is knowing where to go when you need money. There are several ways you can pay for college — a scholarship, out of pocket, financial aid, and student loans. You should look at all of your options and choose what works for you. School counselors can explain how each of these options work. Additionally, if you look at a high interest savings account comparison chart, you see that there is a lot of difference from one bank to another in terms of interest. This means you should carefully weigh your options and choose funding that will meet your immediate and long-term goals.

Get a Credit Card and Use it Responsibly

College is a great time to get your first credit card. According to Sallie Mae, 50 percent of college students have four or more credit cards. However, there are money management skills you should learn before using one. Credit cards should only be used for emergencies when you’re low on cash — they shouldn’t be used on a regular basis. Using money from a savings account is a much better option. Do a high interest savings account comparison to see where you should put your money and which bank you should use to get a credit card.

College brings financial stress, but it will pay off in the end. What other money management skills do you think college students need to know? Leave a comment below.