Managing Your Student Funds
student lending articles and tips
Students attending college are going to spend a lot of money over the next academic year. Most of the money spent will be on big-ticket items such as tuition, housing, and books. But there are other daily expenses that crop up that can quickly deplete student funds - most notably food, transportation, supplies, medication, recreation, and other personal needs.
Outlined below are some recommended steps to help students manage their money wisely:
- Step 1: Start with a Budget Plan
all students should have a budget plan for school. The plan lists the financial aid options you have for the academic period and the month-by-month spending plan.
Budget plans help students understand where they need to save and reduce daily spends in order to stay within budget limits. It's far better to budget financial shortfalls so that you can arrange future financing when needed.
Budget plans You can estimate and budget these expenses by month using our FREE college budgeting worksheet. Link to our budgeting module for our guide and worksheet.
- Step 2: Record Your Daily Spend
students need to keep tabs on their daily spend so that they stay within budget. Tracking your spend for an academic year will help you plan budgets for future years.
Tracking daily spends can be a simple notation on paper or electronic device. Make sure you record your spend on the budgeting worksheet to monitor aid gaps.
- Step 3: Use Pre-Paid Credit for Money
there are multiple ways student can pay for everyday expenses. Let's review best options to help control spending and maintain budget limits.
Cash
Advantages: can be easily exchanged for merchandise or service
Disadvantages: not easily storable. You open yourself up to theft at if you keep money in your dorm or on your person.
Personal Checks
Advantages: your money is kept safe in the bank and only disbursed when you write a check
Disadvantages: many local merchants won't accept student checks for payment. You also risk fraud if your checks are stolen.
Credit Cards
Advantages: comes with fraud and theft protection. Cards can be used for almost all purchases.
Disadvantages: cards are open lines of credit that can be abused. Student can quickly get into debt and spend beyond budget limits.
Pre-Paid Credit
Advantages: looks and works just like credit cards
Disadvantages: you need to load money to the card in order to use it -- which can be an advantage for budgeting daily spend.
About Pre-Paid Credit
Pre-paid credit is one of the best money management tools for students on a tight budgets. Pre-paid credit works exactly like credit cards except for one thing -- the amount you can spend with the card is dependent on the amount you load to the card.
That is the key advantage. You can budget what you want to spend by week or by month and load that amount from your student funds to the card. You can then use the card to buy food, supplies, recreation, etc., and limit your spend to the amount loaded. When the amount runs out, your budget has been met.
Example how pre-paid cards can work for students:
- Student or parent gets a prepaid card for student's use in college (approval guaranteed). Student or parent adds spending money to the card.
- Student uses the card to buy food, supplies, pizza, etc., at any merchant that accepts MC/VISA cards.
- Student or parent can monitor pre-paid account electronically for budgeting purposes. Pre-paid cards can help maintain a spending budget.
- Student or parent can reload the card with additional monthly spending funds as needed.
- Using pre-paid cards protect the student from accumulating credit card debt and to stay within budgeted spending limits.
- Students can use pre-paid cards to build a credit history for future credit approval on auto loans, employment, home mortgages, etc.
Other Advantages:
- budget your monthly spending amounts
- avoid interest rate charges
- avoid getting into credit and debt problems
- manage your account online
- build up your credit reporting history
- use
where credit cards are accepted
If You
Need Extra Money to Pay Your Estimated College Costs:
students can use private student loans to instantly borrow up to full cost of education to pay tuition, housing, computer, and other related college expenses not covered by college aid and parent contribution.
Private student loans are a great resource when you need extra money. Sometimes your college and personal aid will not cover the full cost of education after your run your budgeting analysis. That is when you turn to private student loans to make up the difference from the cost of education and the amount of student financial aid that you have. See more information about private student loans.
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