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College is hard work. But between studying and attending classes, you probably find time for fun and friends. This is the time for self-discovery, and if your parents offer financial support, college might be your four-year vacation before adulthood.
But like most good things in life, the party eventually ends. And while you may look forward to walking across that stage and grabbing your diploma, you might question whether you’re ready for the real world.
Managing your personal finances while in school can prepare you for life outside college. Sadly, some college students rely entirely on their parents for financial support. And after graduation, they don’t know the first thing about credit or managing money.
To make the transition from college life to real life easier, take control of your finances while in school.
1. Get a job. Not to say you have to work a 40-hour work week. However, a part-time job a few days each week can provide real work experience. You’ll learn how to deal with coworkers and bosses, plus the money from your job can help cover some of your expenses, such as food and transportation.
2. Open a savings account. Don’t blow your entire paycheck on entertainment and clothes. It’s okay to treat yourself from time to time, of course. But it’s important that you make saving a priority. The more cash you save while in school, the easier it is to buy a house or create a nest egg after graduation. Check around and compare bank savings account rates, and consider high yield savings accounts, which offer better rates than a traditional savings account.
3. Apply for a credit card. You may feel that it’s impossible to get a credit card with part-time income. However, several banks offer college student credit cards. Eligibility requirements vary. And while some banks may require a cosigner, others will approve you without a cosigner as long as you’re employed and have a bank account. Getting a credit card early helps you establish a credit history. Pay your bill on time each month and don’t max out your account. Aim to pay off your balance in full each month. Stick with these responsible habits and you’ll develop a strong credit rating in no time.
4. Learn how to budget. Even if you don’t have a lot of bills, a budget makes financial sense. Plus, if you develop your budgeting skills now, it’ll be easier to create a budget after graduation. A budget is comparable to a spending plan, in which you decide how much to spend in different areas each month.
5. Make student loan payments while in school. Federal student loans don’t require repayment until after graduation, however, interest does incur while in school. To reduce how much you’ll owe after graduation, take some of your work income and make periodic interest payments while in school.
Don’t wait until you’re about to graduate to get serious about your money. If you have few bills and limited responsibilities while in school, this is the perfect time to get your money on track.
How did you adjust to life after college?