Essential Financial Tips for College Students: Building a Strong Financial Foundation

College is a pivotal time in life, marking the transition to adulthood and independence. It’s also the perfect opportunity to start building your financial health and credit. However, a lack of financial knowledge, combined with the temptations of college life, can lead to financial trouble. At O1ne Mortgage, we understand the importance of establishing a solid financial foundation early on. Here are five essential financial tips for college students to help you avoid pitfalls and start on the right foot.

Start a Budget

One of the best ways to ensure financial stability is to create a basic budget. A budget helps you cover all your expenses and live within your means, preventing the need to borrow money for routine bills. Begin by adding up all your monthly income, which may include financial aid, allowances from your parents, and any money you earn from work.

Next, tally up all your monthly expenses to see how much money you have available each month. If your expenses exceed your income, you may find yourself going into debt. To avoid this, look for ways to cut expenses or increase your income until you can live within your means. Budgeting is a useful tool, even if you have a low or irregular income, as it provides structure and accountability for your spending. You can use an app, a spreadsheet, or the envelope method—whatever works best for you.

Open a Savings Account

College can be expensive, and it’s not uncommon to be scraping by on instant noodles to afford textbooks. However, if possible, this is the ideal time to open a savings account and start setting aside money, even if it’s just a few dollars here and there. Savings accounts can help you save for goals like vacations or buying a car, and they can also be used to build an emergency fund.

Your emergency savings should not be for everyday spending; its purpose is to cover unexpected expenses, such as a broken phone or a car repair. It can also come in handy if you lose a job or another source of funding. Having this savings buffer allows you to pay for emergencies in cash, avoiding costly debt.

Build Your Credit

While you may not have thought about it in high school, college is the time to start building your credit. Your credit will be checked when you apply for apartment rentals, open new utility or phone accounts, and apply for loans or credit cards. If your credit is new and limited, you might face high fees and interest rates or even application rejection.

To start building credit, consider opening a student credit card or asking your parents to add you as an authorized user on their credit card account. If you get your own credit card, remember to pay off your balance every month to avoid interest charges. Using your card responsibly—keeping your balance low, only spending what you can afford, and paying all bills on time—will help build your credit positively.

If you don’t have any credit accounts yet but want to start building credit, you can use services like Experian Go™ to establish a credit report and begin your credit-building journey.

Automate Bill Payments

If you’re used to your parents taking care of your bills, it can be a rude awakening to suddenly be responsible for paying for things like phone bills, utility bills, or car payments. Forgetting to make a payment can result in late fees and a ding to your credit score. Ongoing failure to pay could lead to account closure and debt collectors pursuing payment, causing long-term damage to your credit.

The solution is to use autopay whenever it’s offered. Most recurring bills offer this option, allowing you to put a card on file that’s automatically charged on the same date each month. This ensures your bill is never paid late. Just make sure you have enough money in your account each month to cover the payment.

Some companies allow you to select the autopay date, so choose a date that aligns with your financial situation. For example, if you receive financial aid or paychecks at the beginning of the month, it may be less stressful to have autopay run around the same time.

Get a Side Hustle

If you find that your family or financial aid doesn’t provide enough money to make ends meet or to enjoy some of the activities you love, getting a job could be the answer. Many students wait tables or bartend in their spare time. However, if you’re overloaded with coursework or extracurriculars, a consistent part-time job might be difficult to manage. In that case, consider flexible side hustles such as:

• Babysitting for local families
• Pet-sitting or dog walking using apps like Rover or Wag
• Offering tutoring in subjects you excel in
• Delivering food or groceries using apps like GrubHub, Instacart, or DoorDash
• Giving rides on Lyft or Uber
• Joining TaskRabbit to help locals with odd jobs

The Bottom Line

Financial literacy isn’t uniformly taught in America, so many college students arrive on campus without a clue about managing their money or building a positive credit history. By taking the time to learn the ropes as soon as possible, you’ll set yourself up for future success. Leaving college with minimal debt, a growing credit history, and budgeting know-how will make the transition to the working world much easier.

At O1ne Mortgage, we are committed to helping you build a strong financial foundation. For any mortgage service needs, call us at 213-732-3074. Our team of experts is here to guide you every step of the way.