Money 101: Essential Financial Advice for College Freshman

Starting college is an exciting time, but it can also be a very expensive one. Here’s how to graduate with the least amount of debt possible.

Too many people start their adult lives with a shiny new diploma—and a pile of crushing debt. If you don’t want to be part of the student debt epidemic, then you’ll need to start making smart money decisions from the moment you graduate high school.

Be Strategic About Studying

Start thinking about college as an investment in your future. While you don’t necessarily need to choose a major based on the potential of getting a well-paying job, you do need to start thinking of your classes as a service that you are paying for. Why wouldn’t you want to get what you pay for? Any time that you skip class, show up late, or don’t pay attention, you are wasting not just money but a once-in-a-lifetime opportunity.

Student Loans

It’s not a bad idea to take your foundation classes at a local community college or even online while you save money by living at home. That might not give you the stereotypical college experience, but you’ll save a ton of money per credit hour. Then, when you transfer to a bigger college or university, you’ll be in a great position to kick off your undergrad life in earnest.

Take Responsibility for Your Finances

Most high school students are used to parents taking care of the household finances. But once you head off to college, you should take charge of your money. Consider it a bonus class in economics.

You should start by establishing your own bank account. Avoid banks that charge you a monthly or annual fee. While you can get a bank account that you share with a parent or guardian, you might want to get your own account instead. The benefit of sharing an account is that someone else can help you out if you end up running short. The downside, however, is that you’ll have less independence.


If you do have a joint account, you can still convert it to a solo account after you graduate. Set up a savings account while you’re at it; most banks and credit unions require that you deposit a minimum amount (anywhere from $25 to $100). Make a goal of saving $1000 for emergencies—and then don’t touch it unless there’s an actual emergency.

Furnish Your Doom Room for Cheap

One of the biggest mistakes I made when I moved into my first dorm room was bringing enough stuff to furnish an apartment. Trust me—you don’t need nearly as much as you think. Most dorms are outfitted with Twin XL beds, so you’ll need to buy special bedding that you won’t ever use again. Bummer! Most chain retailers will be stocked with college bedding in late summer, but you might want to check out local thrift stores to see if you can get secondhand sheets for a fraction of the cost.

Thrift stores are also a great source for lamps and bookshelves, as well as everything you might need to set up your kitchen. Speaking of kitchens, it’s worth buying a small microwave if your dorm allows it. Combined with a minifridge, you’ll be able to take advantage of leftovers. Keep a stash of off-brand plastic containers and zip-top plastic bags, too.


One pro tip for future years is to check out what other students are leaving behind. Many folks—especially graduating seniors—would rather leave most of their college stuff behind rather than fool with moving it back home. You may be able to barter for stuff you need or pick things up for free. Then, when it’s your turn to graduate, you can help out underclassmen in the same way.

Read More: 14 Easy Ways to Save When Money is Tight

Set a Budget for Food and Fun

I won’t lie: budgeting isn’t fun. But it’s one of those absolutely necessary parts of being an adult. If you’re living in a dorm and taking advantage of a meal plan, then most of your biggest bills will be taken care of. However, you’ll probably want to treat yourself to pizza from time to time, plus new clothes, extra school supplies, and fun with your friends. Do you know how you’re going to pay for it?

Set a budget that makes sense for your financial situation. Whatever you do, don’t take out additional student loans to subsidize your social life. You’ll end up paying hundreds, maybe thousands, in interest by the time you finally pay back the loan. One really easy way to stick to your budget is to use the cash stuffing or envelope method. Essentially, you withdraw as much cash as you need for each part of your budget. You’ll be much more mindful of your spending when you use cash instead of a card.

woman writing out a budget with a cup of coffee

Track your spending in a spreadsheet or even a notebook. You might be shocked at how fast your budget gets depleted. (Sadly, that doesn’t change after you graduate.) Remember that your budget is a living thing, and it’ll change as your needs change. Revise your budget every month or quarter to make sure that it’s still working for you.

Read More: Budgeting Questions to Keep Your Spending in Check

Work Part-Time

Depending on your financial situation, it might make sense for you to pick up part-time work while you study. Many schools offer work-study programs, where the wages from your on-campus job are subsidized by the school. You won’t have to pay that money back later; it’s not a loan. The money is part of your financial aid package, which means that you’ll need to stay in good standing at your job to take full advantage of the deal you’ve been offered.

Working on campus can be convenient if you’re living in the dorms. However, you can also look for a part-time job in town. Most employers in college towns are aware that classes come first, and they’ll work with you to accommodate your class schedule. As a bonus beyond your paycheck, you’ll establish your first professional references. That’ll give you a jump-start on getting a job after you graduate.

Standing man shaking hand with woman interviewer

Thanks to the internet and the gig economy, it’s increasingly possible for anyone—including students—to pick up contract work as well. If you’ve got a specialized skill, such as editing, graphic design, or tutoring, then you could potentially make a little money on the side. Just be aware that you’ll have to pay taxes on that money. Those taxes can get complicated if your parents or guardians are still claiming you as a dependent, so you might want to chat with a tax professional to make sure you’re on the up and up.

Read More: Side Hustles: Making Money on the Side Without Breaking a Sweat

Get Free or Discounted Stuff

One of the best things about being a college student is all the free and discounted stuff you can get. With your student ID and your .edu email address, you can access a ton of benefits. For example, Amazon Prime costs less if you’re a student. You can get cheaper flights, train tickets, and bus passes, too. Most museums are cheap or free for students. Always ask if there’s a student discount; the worst you’ll get is a “no.”

university students studying

Take advantage of every opportunity for free events at your college. You’ll hardly ever need to pay for entertainment because there’s so much to do. Most colleges will have a calendar of events, so check it! In addition, there may be free things to do in the area. Look for your town’s event calendar to see what there is to enjoy.

AutoPay Your Bills

You know what’s worse than paying bills? Paying them late. Don’t through away money on late fees—ever. One way around that is to set up auto-pay for all of your monthly bills. Just make sure that you’ve budgeted correctly and have enough cash in your account to cover everything. Bouncing a payment isn’t any better than paying a bill late. In fact, I’d recommend turning off overdraft protection on your account so that you won’t accidentally pay even more fees.

Top view of stressed young asian woman trying to find money to pay credit card debt.

It’s also not a bad idea to pay bills annually instead of monthly. For example, my phone carrier gives me the option of paying for an entire year of service at a steep discount. It’s a great deal as long as I’ve budgeted for the expense. Most subscription services, such as Netflix or Amazon Prime, also give you the option of paying annually. You can even pay your car insurance in a lump sum instead of monthly.

Be Cautious with Credit

Finally, let’s talk about credit. Specifically, let’s talk about compound interest.

Compound interest can either be your best friend or your worst enemy. When you save money in an interest-bearing account, every time the interest ticks over, it’s added to the total. Then, the next time it ticks, you’ll earn even more interest. And again, and again. That’s why investing—in the stock market, for example—builds wealth. You just keep reinvesting the interest and growing your money.

student credit card

Unfortunately, it works the other way too. When you buy on credit and don’t pay it off completely at the end of the month, your card’s balance will accrue interest. And then, if you buy more while only paying the minimum each month, your balance will just keep growing as the interest keeps getting compounded. Obviously, that’s a bad thing.

It’s not uncommon for credit cards to charge over 20% interest, so if you do decide to use a credit card, always pay it off in full every month. Never spend more than you can afford to pay. That’s a lesson that everyone—not just college students—needs to learn.

Read More: What to Look For in a Student Credit Card

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