10 Financial Habits Every College Student Should Practice

Posted by Pam Hill in College LifeJune 20, 2022(Last Updated December 9, 2022)5 min read
Key Takeaways
  • It’s never too early to begin understanding your finances, especially as a college student.
  • Even college students can create a budget to get a visual picture of their expenses and income.
  • Saving and investing small amounts regularly can help you to establish good money habits.
Are you ready to make some real money moves?

When asked what advice they would give college students, almost every adult would say, “I wish I had known/done/understood XYZ earlier.” That sage advice goes double for personal finances. Understanding your money and knowing how to plan and manage it, whether your funds are of the nickel and dime variety or trust-fund bountiful, is critical to your financial future.


So whatever your college major, add a new one to it: developing a plan for your finances. By establishing a solid and friendly relationship with financial topics as a college student, you increase the likelihood that you’ll understand and seek out opportunities for financial growth and success down the road.


Let's dive into the ten habits every student should practice to build their financial foundation!

1. Create a Budget


It can be easy to underplay the necessity of a budget as a student. But being a student is a great time to start your first financial habit of looking at your finances and planning how much you will spend and earn each month.  


Recommended Read: Four Types of Budgets to Level Up Your Finances


On the spending front, break out your expenses into categories—food, utilities, rent, books, and so on—and estimate your monthly costs based on your prior bills. Likewise, for your income, look at your paycheck, loans, scholarships, and other sources of funding and estimate how much you will receive from each on a monthly basis.


2. Apply for For Federal Aid


If financial aid is part of your current reality, as is the case for approximately 85% of all college students, then loans are probably a part of the package. Federal financial aid offers several benefits over private loans. At the top of the list is interest rates. The interest rate on federal loans can be two or even three times lower than for a private loan.  


Additionally, private loans often have variable interest rates whereas federal loans are fixed.  Under today’s inflationary environment, a fixed-rate loan for school offers peace of mind that rates on your loan won’t climb ever higher. Other benefits of federal aid include the ability to postpone payment for three years. For instance, if you’re in a financial bind and the ability to borrow without a credit history.


3. Apply for Scholarships Early and Often


Applying for scholarships can seem time-consuming when you’re a busy student. But think of it this way, if you were walking along and saw a $5 bill under a tree, would you pick it up or would you think to yourself, ‘I don’t have time to bend down and pick up a lousy $5 bill!” 


Most people would pick up the $5 bill. So if we would make time to pick up $5, think how much more we would have in our bank account by applying for scholarships worth hundreds and even thousands of dollars. 


If you’ve applied for a scholarship before and didn’t receive one, remember that persistence pays. Start your next application essay by letting the committee know that while you applied last year and were not awarded a scholarship, you are very much interested in their mission, and are applying again with the hope of receiving reconsideration.


4. Stay Frugal


Students are masters at living on less out of necessity, between the costs of tuition, housing, food, and books. When a scholarship or unexpected pay increase comes through, it can be tempting to spend the windfall on your wishlist of nice-to-haves. Instead, continue to live below your means and use the additional funds to pay down debt— for instance, credit card debt or a car note— or increase your savings or investments.

Recommended Read: How to Make Your Money Stretch Through A College Semester


5. Track Your Expenses


In order to help ensure that you stay on track with your budget, make a date with yourself each month and compare your credit card and bank statements to your budget. Take note of areas where your spending is higher or lower than budgeted, and determine what this means in terms of whether more income or decreased spending is needed.


6. Budget Money for the Little Extras


A budget that doesn’t take into account the occasional splurge on entertainment and dining out is destined to fail. Build in a category for discretionary spending so that when you take a break from ramen noodles and order pizza, you don’t feel like you’re breaking the bank.


7. Find Ways to Save


Challenge yourself to find ways to save. For example, instead of buying brand new textbooks, ask yourself if buying a used one or renting one would work just as well. Likewise, rather than signing up for the campus meal plan, do you have the option to skip it and cook for yourself? The goal is to find areas for savings that feel like something you can really stick with.


8. Budget for Emergencies


Creating a budget category for emergencies ensures that you have money set aside should the unexpected arise. There are ways to fund your rainy day fund and it ranges from opening up a dedicated saving account and contributing a few dollars each week towards it to labeling an envelope titled ‘Emergency-Only’ and adding coins and dollars to it. What’s important is that you start, and don’t overlook the need to plan for an emergency.


CapWay Pro Tip: Open a CapWay Money Account to store money and access various features including tracking your spending and utilizing the Money Goal buckets. 


9. Use Your Credit Card Responsibly


Credit cards can become an expensive habit when not used responsibly. As a student with limited income, your goal is to use your credit card sparingly and pay off your balance in full every month. Paying only the minimum amount on your card can cause even a small charge to grow quickly over a few months.


10. Invest Small Amounts


Investing might sound like something that’s outside the grasp of college students, but numerous online investment tools and platforms exist to help beginners. Most important is to start small and choose low-risk options such as certificates of deposit or index funds before exploring riskier investments like stocks and cryptocurrency.


The Money Wrap-Up


Creating strong financial habits starts early. Developing a budget, tracking your spending, and making small but steady contributions towards savings and investments can create a solid financial foundation for long-term success.

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