Where should someone begin if they have never created a budget previously?

A key topic we discuss with students is the necessity of having open and transparent discussions with their parents or anyone in their support network to ensure alignment on who is responsible for which expenses and when. Who handles the balance on a student’s account? Books and materials? Medications? Miscellaneous expenses? Each student will incur specific costs that families should consider prior to starting college.

How can a student create a budget if they’re unsure of upcoming expenses?

Essential needs related to housing and meals are predictable for students. However, they should also evaluate potential costs related to the extracurricular activities and organizations they wish to join. A reasonable starting point is your university’s financial aid webpage, which frequently contains estimated costs. Additionally, I suggest familiarizing yourself with your financial aid officer.

It’s equally vital to understand the funds and resources at your disposal. Perhaps you have a financial aid refund or employment. Or maybe you’ve received gifts for graduation that you can access. We advise you to distribute that amount across the academic year, so you can stay organized and adjust as needed.

Consider your objectives. Is your aim to cover out-of-pocket costs, or are you striving to save? Perhaps you plan to undertake an unpaid internship during the summer or have other future expenses to save for. It’s always prudent to have a financial cushion for emergencies.

WashU and numerous other institutions utilize the iGrad platform, offering user-friendly digital budgeting tools and insights on various personal finance subjects. There are also many free apps available, such as Empower, that assist with tracking spending, budgeting, and offer additional resources.

What are the advantages and drawbacks of obtaining credit cards while in college?

During my college years, I accrued credit card debt, so I’m aware of the ramifications of placing a meal or a new sweater on a card. However, establishing credit early is crucial. Many major credit card companies offer what’s known as secured credit cards. The concept is that students without credit or those looking to improve their credit score deposit a nominal sum, usually between $200 to $500, which serves as collateral. We advise students to use the card for small, predictable expenditures like a Netflix subscription, ensuring that a fixed amount is consistently charged to the card.

The essential part is to keep it a minimal amount and ensure the balance is paid in full each month. By doing so, you demonstrate responsible habits and cultivate a positive reputation with that specific company. Over time, that secured card transitions to unsecured status. This lending relationship is reported to credit bureaus, which enhances your credit score. This is significant because some financial institutions and government agencies require job applicants to provide a credit score or report. Your credit score also affects your ability to rent properties, buy cars, obtain loans for graduate studies, and cover other expenses.

More institutions like WashU are emphasizing financial wellness. What drives this trend?

Whether it’s a two-year community college or a four-year private university like WashU, higher educational establishments are certainly committing to financial wellness. It is insufficient to prepare students for careers if they’re unprepared to manage their finances post-graduation. This aligns with efforts at many colleges to ensure students’ basic needs are met. Educational institutions are discovering innovative strategies to enhance communication, establish peer mentorship and coaching initiatives, and offer new resources. Financial literacy is an essential life skill that we aspire for every student, regardless of their economic background, to possess upon graduation.