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Student credit cards and young credit

It’s not too late to start saving for the fall semester

A new school year is just days away, but you can shore up your savings by amending your budget and planning ahead for college expenses

Summary

Whether you’re about to embark on your freshman year or you’re an upperclassman eager to return to campus, it’s a perfect time to shore up your savings before heading to college. Here are some tips to help you prepare financially for the upcoming semester.

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Once the first days of August hit, the mood of the summer changes, particularly if you’re a college student.

Whether you’re about to embark on your freshman year or you’re an upperclassman eager to return to campus, your mindset shifts from summertime to the coming school year. But you don’t want to check out of summer break just yet. With a few weeks left before classes begin, it’s a perfect time to shore up your savings before heading to school.

If you’ve spent the past three months socking away money from a summer job, good for you. But even if you’ve been more freewheeling with your spending, there’s still time to save for the expenses inherent to college life.

“Once they get to school, there are so many expenses that pop up,” said Ash Exantus, director of financial education and financial empowerment coach at BankMobile. “As those expenses pop up, they become things that – if you decide to borrow or to use a credit card – can become a burden.”

Exantus refers not just to major costs, such as tuition, room and board and books. He said small purchases, such as decorations for your dorm or meals out with friends, can become unmanageable if you rely solely on credit. Whether you need your parents to bail you out or you max out your credit cards (and therefore hurt your credit score and profile), you can soon face an untenable situation.

“Small things you could have paid for out of pocket become debts that you now have to pay interest on,” Exantus said.

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How to save money fast

So, how can you save money fast between now and move-in day? First, let’s tackle the low-hanging fruit.

Instead of meeting up with local friends for pricey farewell dinners before everyone heads back to school, suggest packing a picnic (prepared with food from your parents’ refrigerator) instead.

Or, organize a movie marathon night where everyone brings a favorite snack. Calculate how much you would have spent on a pricey night out, and put that amount into a savings account. It should go without saying that you’ll want to eliminate coffee shop purchases and spur-of-the-moment snack runs as well.

If you’re still working your summer job, ask your boss for extra shifts. Even a few extra hours a week can help you earn enough to cover things like gas, school supplies and the occasional pizza night with your roommates.

But perhaps extra shifts aren’t available. At that point, you may want to ask your parents if they need any odd jobs done around the house. They may be happy to offload some errands or tasks in exchange for giving you extra cash for school.

Barring that, consider looking for side gigs such as short-term pet sitting, lawn care and other tasks with which people in your neighborhood could likely use some help.

See related:  Choosing a student credit card

Don’t rely on credit cards alone

Even if you have a credit card, you don’t want to charge expenses without knowing how you’ll pay the bill in full.

The more money you save in the next few weeks, the greater breathing room you’ll have when unexpected expenses occur. You’ll also be better positioned to say yes to bonding activities, like impromptu road trips with your roommates or concert tickets when your favorite artist announces tour dates near campus.

The money will already be in your bank account, so you won’t need to scramble for cash or go into debt just to participate.

“By saving that money ahead of time and creating a little fund for yourself to purchase the odds and ends, you’re able to avoid paying 23 percent more for an item than you would if you put it on your credit card and carry a balance,” said Erick Jones, director of the Student Money Management Center at the University of North Georgia.

Jones said planning ahead for expenses is also key because financial stress negatively impacts your overall quality of life.

“The preplanning will allow you to be more successful both academically and socially because you’re not constantly stressed about money,” he said.

That preplanning doesn’t have to be complicated, either. Jones’s recommendation is simple: “Have a plan, write it down, and stick to it.”

Getting clarity about what you need to do – whether that’s saving $100 or $500 before school starts – helps you see the next best steps to reach that goal.

“Money is emotional when it doesn’t need to be, and it’s mysterious when it doesn’t need to be,” Jones said.

That’s especially true for college students, who already have plenty of other concerns on their minds. Identify what you need or want to save, and then work out a strategy for getting there.

See related:  How to get a credit card as a college student

Why saving matters even if your parents have your back

You may have a campus job lined up and therefore feel you don’t need to rely on savings. Or, your parents may provide a stipend for your living and entertainment expenses while you’re away.

But saving money isn’t just about providing for yourself right now. It’s about establishing a lifelong habit that can lead to financial security.

Exantus recommends opening a high-yield savings account and depositing a set amount of money into it every month. You can choose a flat dollar amount or a percentage of your earnings, assuming you have a campus job. Make sure this account is distinct from your checking or debit account so you’re not tempted to make withdrawals from it. The goal is to establish a habit of saving and to position yourself for long-term financial success.

“If they’re still relying on their parents, when they graduate, they’re still going to be so dependent on other people,” Exantus said.

Neale Godfrey, chairman of the Children’s Financial Network, advises students to invest while they’re still in college.

“The miracle of compounding works in their favor, even when they’re young,” Godfrey said. “Anything they can save now, even if they don’t have to use it for college, is going to help them later on.”

She recommended seeking out simple investing apps you can use directly from your smartphone and which let you build a portfolio at relatively low costs. Then, be conservative and don’t touch the money.

“The big thing is to buy and hold. Don’t play the market,” Godfrey said. “Don’t listen to the hot tips you have from friends.”

Saving and investing in college, even in small amounts, establishes important habits and gives you financial assets even before you graduate.

A milestone to maturity

Up to this point, your parents may have always led conversations about your finances. But don’t feel as if you need to wait for their cue. Asking them to work with you on a budget and asserting your financial goals is a sign of independence and maturity, one that your parents will likely welcome.

“Let the kid initiate sitting down with the parents and saying, ‘You know what? I’d like to work out a budget. What are your expectations for me to pay for stuff during the semester?’” Godfrey said.

That will help you focus on your immediate savings goals, as well as how you’ll manage your money if you are earning throughout the semester.

Not only will your parents appreciate the gesture, but they may also have good advice to offer and can share tips with you. Depending on your family’s financial circumstances, you may even consider asking your parents to do a matching savings plan, Godfrey suggested. They may be willing to contribute to your savings account up to a certain dollar amount if they see that you’re serious about building your own assets.

Regardless of your parents’ level of involvement, however, you can begin establishing your own financial foundation as you save of your own accord. And there’s no better way to do that than to budget and plan for the upcoming semester.

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The editorial content on this page is based solely on the objective assessment of our writers and is not driven by advertising dollars. It has not been provided or commissioned by the credit card issuers. However, we may receive compensation when you click on links to products from our partners.

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