3 Money Lessons Every Freshman Needs Before Starting College
Written by
Laura Bogart
Edited by
Amber Barkley
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As college dorm rooms open and classroom lights power on, freshmen around the country are stepping into the hallowed halls of higher education for the first time. Their minds are open to learning, and their spirits are receptive to fun new experiences.
However, college also brings the lessons they can’t get from textbooks, like how to live on their own for the first time — and, crucially, how to navigate their finances. One of the best steps a guardian can take before sending their kids off to college is giving them a solid foundation in personal finance 101.
To help you understand the key money lessons your college freshman should know before they head off to school this fall — sparing you (some) tears — GOBankingRates talked to financial experts who have their own curriculum for basic financial literacy.
Intro to Budgeting
If there’s one skill that any incoming freshman should have to save their green as they make the grade, it’s budgeting. Dennis Shirshikov, head of growth at Go Summer, said college students should hit the quad with the ability to create a budget that will help them track their income and expenses, enabling them to live within their means.
He cited the example of a student who uses their grocery budget to prevent overspending and avoids the temptation to use credit cards for their daily expenses.
“A useful exercise is to have students list all their monthly expenses, including unexpected ones like social activities, and then compare this against their income,” he said. “This not only provides a clear picture of their financial situation but also helps in setting realistic spending limits.”
The prevalence of budgeting apps can also make it even easier for young people to start budgeting. According to Melanie Musson, insurance and finance expert, getting kids used to balancing their budgets before they go to school, including relying on these budgeting apps, is an ideal plan of action.
“Before kids go to college, they should be used to living on a budget. If they have a job the summer before they leave, it’s the perfect time to get some practice working with a budget,” she said. “Budgeting apps allow you to track all your spending, which can be helpful for young adults figuring out how to balance money they have with what they spend.”
Checking and Savings 101
As students learn to master their budgets, they should also be prepared to manage their checking and savings accounts. Shirshikov said students need to learn that monitoring their account balances regularly will prevent overdraft fees — while also giving them appreciation for the benefits of having a savings account to help cover emergency costs.
He added that getting students in the habit of setting up automatic transfers from checking to savings ensures that they’re consistently saving income, like earnings from a part-time job. “This practice not only builds a financial cushion but also instills a habit of saving early on,” he added.
Foundations in Social Spending
If there’s one thing college is known for — other than the opportunity to broaden the mind, of course — it’s the chance to socialize with new people. It’s easy for young people to get so excited about all the new hang outs that, though your student’s social calendar is full, their wallet is decidedly not.
As a parent and business owner, Kristin Marquet of Marquet Media, LLC, has thought about the best ways to prepare young people for the independence of college life. She said helping students manage their “social spending” is essential.
“Encourage your kids to allocate a specific amount for social activities each month and stick to it,” she added. “This helps them enjoy their college experience without falling into the trap of overspending.”
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