01 Jan Setting Financial Resolutions for College Students

The start of a new year is the perfect time to set financial resolutions, especially for college students who are learning to manage their money for the first time. Establishing good financial habits now can set the foundation for a secure financial future. As college students, you’re juggling tuition, living expenses, and possibly even part-time jobs—all while trying to maintain a social life and academic success. At Accolade Financial, we believe that creating and sticking to financial resolutions can make your college years more manageable and set you up for long-term financial success. Let’s explore some key resolutions that every college student should consider.

Creating a Realistic College Budget

One of the most important financial resolutions for college students is creating and maintaining a realistic budget. A budget helps you keep track of your income and expenses, ensuring that you’re living within your means.

• Track Your Income and Expenses: Start by listing all sources of income, such as scholarships, financial aid, part-time jobs, and any contributions from family. Then, list your regular expenses, including tuition, rent, groceries, transportation, and entertainment. This will give you a clear picture of where your money is going.
• Set Spending Limits: Based on your income and expenses, set spending limits for each category. Prioritize essential expenses like tuition and housing, and allocate a reasonable amount for non-essential items like dining out or entertainment.
• Use Budgeting Tools: Consider using budgeting apps like Mint, YNAB (You Need a Budget), or even a simple spreadsheet to track your spending. These tools can help you stay organized and alert you when you’re approaching your limits.
• Review and Adjust Regularly: Your budget isn’t set in stone. Review it regularly and make adjustments as needed. If you find that you’re consistently overspending in one area, look for ways to cut back or increase your income.
• Avoid Impulse Purchases: College life can be full of temptations to spend, whether it’s on new gadgets, trendy clothes, or spontaneous trips. By sticking to your budget, you can resist these impulses and avoid unnecessary debt.

Creating and sticking to a budget is the foundation of financial health during your college years and beyond.

Building an Emergency Fund

Another crucial financial resolution for college students is building an emergency fund. Life is unpredictable, and having a financial safety net can help you navigate unexpected expenses without going into debt.

• Start Small: If you’re new to saving, start by setting aside a small amount each month, even if it’s just $20 or $50. The important thing is to make saving a habit.
• Set a Savings Goal: Aim to build an emergency fund that can cover at least three to six months of living expenses. This may seem like a lot, but by saving consistently, you can reach this goal over time.
• Automate Your Savings: Consider setting up automatic transfers from your checking account to your savings account. Automating your savings makes it easier to stay consistent and lessens the temptation to spend the money.
• Use a High-Yield Savings Account: If possible, open a high-yield savings account for your emergency fund. These accounts offer higher interest rates than traditional savings accounts, allowing your money to grow faster.
• Keep the Fund Separate: To avoid dipping into your emergency fund for non-emergencies, keep it in a separate account that you don’t touch unless absolutely necessary.

Building an emergency fund provides peace of mind and financial security, allowing you to handle unexpected expenses without derailing your budget.

Reducing Unnecessary Expenses

As a college student, it’s easy to overspend on things that aren’t truly essential. Reducing unnecessary expenses is a key resolution that can help you save money and stick to your budget.

• Identify Non-Essential Spending: Take a close look at your spending habits and identify areas where you can cut back. This might include dining out, subscription services, or impulse buys. By recognizing these patterns, you can make more intentional spending decisions.
• Limit Eating Out: One of the biggest areas where college students tend to overspend is on food, especially eating out. Cooking at home or utilizing your meal plan can save a significant amount of money over time.
• Use Student Discounts: Take advantage of student discounts on everything from software to entertainment. Many businesses offer discounts to students, so always ask if there’s a discount available before making a purchase.
• Buy Used or Rent Textbooks: Textbooks can be a major expense, but you can save money by buying used books or renting them instead of purchasing new ones. Online platforms and campus bookstores often offer these options at a fraction of the cost.
• Review Subscription Services: It’s easy to accumulate multiple subscription services, from streaming platforms to monthly boxes. Review your subscriptions and cancel any that you’re not using regularly or that you can live without.

By consciously reducing unnecessary expenses, you can free up more money to save, invest, or use for essential costs, helping you stay on track financially.

Improving Credit Scores

Your credit score is an important part of your financial health, and it’s never too early to start building and improving it. A good credit score can open doors to better loan terms, lower interest rates, and even rental opportunities in the future.

• Understand Credit Basics: First, understand what affects your credit score: payment history, amounts owed, length of credit history, new credit, and credit mix. Knowing these factors can help you make informed decisions that positively impact your score.
• Pay Bills on Time: Your payment history is the most significant factor in your credit score. Make it a priority to pay all your bills on time, including credit card payments, utilities, and any student loans.
• Use Credit Responsibly: If you have a credit card, use it responsibly by keeping your balance low and paying it off in full each month. Avoid carrying a high balance, as this can negatively affect your credit score.
• Limit New Credit Applications: While it’s important to build credit, avoid applying for too many new credit accounts at once. Each application results in a hard inquiry, which can temporarily lower your credit score.
• Monitor Your Credit Report: Regularly check your credit report to ensure that all information is accurate and up to date. You’re entitled to one free credit report per year from each of the major credit bureaus, so take advantage of this to keep track of your credit health.

By focusing on building and maintaining a good credit score, you set yourself up for better financial opportunities in the future.

Planning for Future Financial Goals

While managing your current finances is important, setting financial goals for the future is equally crucial. As a college student, it’s never too early to start planning for what’s next.

• Set Short- and Long-Term Goals: Begin by setting both short-term and long-term financial goals. Short-term goals might include saving for a summer trip or paying off a credit card, while long-term goals could involve saving for a down payment on a house or investing for retirement.
• Create a Savings Plan: Once you’ve identified your goals, create a savings plan to achieve them. Determine how much you need to save each month and automate your savings if possible to stay consistent.
• Explore Investment Options: If you have some savings, consider exploring investment options to grow your money over time. Even small contributions to a retirement account or investment portfolio can make a significant difference in the long run.
• Consider Professional Advice: As your financial situation becomes more complex, consider seeking professional financial advice. A financial advisor can help you create a comprehensive plan that aligns with your goals and risk tolerance.
• Stay Flexible: Life is unpredictable, so stay flexible with your financial goals. Be prepared to adjust your plans as your circumstances change, but always keep your long-term objectives in mind.

Planning for future financial goals ensures that you’re not only prepared for life’s unexpected expenses but also on track to achieve your dreams.

Empowering Your Financial Future

Setting financial resolutions as a college student is an empowering way to take control of your finances and set the stage for a secure future. By creating a realistic budget, building an emergency fund, reducing unnecessary expenses, improving your credit score, and planning for future financial goals, you can navigate your college years with confidence and ease.

If you need personalized guidance on managing your finances or planning for the future, contact us at Accolade Financial. We’re here to help you achieve your financial goals and build a strong foundation for success.