The College Success Playbook

While there is no such thing as a “set it and forget it” approach to personal finance, there are strategies you can use to develop healthy and sustainable financial habits.

Whether you are a current college student, a recent graduate, or someone reminiscing on your college years, personal finance fundamentals are an essential element of creating a strong financial foundation during your college years.

In this month’s podcast, Ben and Kyle break down how college students can use budgeting, savings strategies, and credit cards to help them create their own personal finance college success playbook.

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This month’s podcast is also Ben’s last podcast as a co-host of Grow Your Balance. Ben has been critical to helping get this show off the ground, and we wish him well in his next endeavor.

We look forward to having him back as a guest in the future!

Creating Your Personal Finance “Playbook”

College is a time of exploration and growth.

Exploring personal finance fundamentals and creating sustainable habits that will fuel future financial growth starts with the following:

1. Build a Budget and Use It

If nothing else, building a budget helps you distinguish between your needs, wants, and nice-to-haves.

Although you may struggle with sticking to your budget at the beginning, the process of building and maintaining one will help you tremendously as you become more independent throughout your time in college. Here are some tips for building and maintaining a budget:

• Categorize your expenses and label them as needs, wants, and nice-to-haves. 

• Create a system. Whether you use Excel or the back of a napkin, finding a way to track your expenses will help you evaluate your budget.

• While there may be some fixed expenses you must ensure you can cover, to the extent possible, try to use percentages for your budget allocations. When you create a percentage-based budget, you won’t need to adjust it if your income is variable. 

• Don’t be afraid to make changes. Budgeting can be challenging, and it becomes even more difficult when you fail to adjust your budget to match your habits and lifestyle.

2. Prioritize Saving

Saving during college can be challenging, but it is a crucial component of developing healthy financial habits. Unexpected expenses and inconsistent income can throw savings goals off track, but if students use the following strategies, they can effectively prioritize saving:

• Start an emergency fund. While many individuals strive to save enough to cover 3-6 months of expenses, an emergency fund of $1,000-$3,000 can be a great start, providing some peace of mind.

• Carve out a portion of your monthly budget to allocate money to your emergency savings. Hopefully, you have a fantastic budget set up, but if you don’t, give this podcast episode a listen.

• If you’re confident about your short-term savings, start thinking long-term. You can leverage investing or accounts like a Roth IRA to build wealth over time. 

3. Credit Cards Are the Tool To Build Credit

Credit cards, if used correctly, are a phenomenal way for college students to build credit.

However, students must be careful, as they can also lead to dangerous habits. The following guidance can help college students get the most out of credit cards:

• Pay off your statement balance in full each month. Although there will be multiple types of balances on each account statement, the statement balance represents the credit card spending recorded during the statement period. Paying off that balance will help you avoid paying costly interest payments on the money you’ve borrowed!

• Keep your total credit card usage below 30% of your credit limit to avoid negative impacts on your credit score.

• Treat your credit card like cash. Although you may have a substantial credit limit, it is not free money. Credit card debt can be a slippery slope, so you should only use your credit card for purchases that you know you can pay off within the next month.

Cut Through The Noise: Develop a Healthy Skepticism When Seeking Financial Advice

Be on the lookout for our next podcast episode!

As providers of personal finance content, we can confirm: A LOT of financial information exists on the internet and social media.

Some of it can be helpful (like learning to navigate economic uncertainty with your friends at ProsperOn). Some of it can also be unhelpful or outright harmful.

In our next episode, we’ll break down tips and tricks for cutting through the noise of personal financial guidance and information to help you develop a healthy level of skepticism when exploring personal finance content.

We’ll see you next month!

- The ProsperOn Team