Financial Literacy For College Students: Bank Accounts & Budgeting

Your journey to college marks the start not only of independence away from home but also financial independence. Perhaps your parents are still able to support you in some ways, but how you spend your money will largely be your responsibility. If you’re also covering all or even a portion of your expenses like tuition and room and board, managing money in college becomes even more important. Budgeting is essential as a student, and these years are a critical time to develop financial literacy for college student success as well as success in the working world. At Rivers Edge Bank, we’re here to remind you that financial independence doesn’t mean you’re alone. We’re with you on the journey, helping you with savings for college, money management and financial literacy tips to navigate this expensive yet exciting stage of your life confidently.

Managing Money In College

The College Board estimates the annual average in-state tuition cost—as of 2024—for public four-year colleges and universities is about $11,500. If you leave the state for school or go to a private college, you can multiply that times three or four—the current average for out-of-state public schools is more than $30,000 and over $45,000 for private institutions, respectively. None of these costs include room and board, books or general expenses to make your college experience enjoyable.

So how are you going to afford it? Whatever you can budget for as a student helps reduce the amount you might need to borrow in student loans or how much your parents are able to contribute. While student loans are an option, there are also smart financial tips for students to help you get ahead before arriving at college.

Financial Tips For Students Going Into College

If you’re in high school but looking toward your future, you’re already establishing a solid foundation for yourself to make smart financial decisions as a college student. Your money-earning potential is limited as a student, but there are still a variety of ways you can start to make a dent in what you owe or put savings away in a student bank account.

• Get a part-time job and put earnings into a savings account for college
• Visit your school counselor’s office or go online to sites like studentaid.gov, scholarships.com and local organizations to find scholarships or grant opportunities (free money!)
• Take advantage of advanced placement courses or college-level courses offered through your high school to earn college credits and reduce hours you’ll need to pay for later
• Consider beginning your college career at a community college to complete general course requirements before transferring to a more expensive university for a four-year degree
• Start monitoring your spending now so managing money in college comes more naturally and you can determine an appropriate budget as a student

How To Save Money As A College Student

It might not be a class you take, but one of the most important things you can learn in college is how to manage your money. Financial literacy for college students sets the tone for your relationship with money and spending for the rest of your life, so take steps to set yourself up for success. If you’ve never done it before, now is the time to start budgeting as a student. How much money will you be spending each month, and how much money do you have? It’s not always easy to keep chugging forward, but it’s a lesson you can fall back on for the rest of your life.

The Importance Of Budgeting As A College Student

Before committing to a college and taking out student loans, make sure you consider all of your options, like private, public and community colleges. Private education typically costs more than in-state public school or community college tuition, so you can save money by starting out at a lower-cost community college or choosing a public institution. However, if you’re leaning toward a private university, be sure to reach out to the school’s financial aid office to see if they offer scholarships or grants to help with the costs of tuition. Many private schools have scholarships and grants available to make tuition more affordable so you don’t have to take out as much money from student loans.

As you prepare for college, start mapping out a feasible student budget to cut unnecessary expenses, save more money and minimize the amount of debt you’ll eventually owe. Plan to check out events around campus for free fun and look for student discounts when you’re out on the town. Many businesses offer special prices or deals for students.

Still, managing money in college and earning enough to cover your cost of living and expenses as a student is difficult, so don’t get frustrated if it feels impossible. If you can, track your monthly expenses and look for the potential to cut back in certain areas. You’ll be amazed at all the ways to reduce spending when you keep your eyes open for deals and saving opportunities.

Keep Track Of Your Money With A Student Bank Account

Financial experts recommend that you open a student bank account like a checking or savings account at a financial institution and use that to help you keep track of your money. A debit or credit card can be used instead of carrying large amounts of cash, and with cards, you can track where you’re spending your money and how much you have left. Just be sure to spend less than you have and to pay your bills promptly. Put any leftover money in a dedicated savings account and earn interest over time. Every penny helps!

Be sure to take advantage of online and mobile banking tools at your disposal so you can check your accounts for any problems, day or night. Report questionable transactions immediately and take advantage of account text or email alerts to notify you of things like balance changes, ATM withdrawals, online spending or attempted password changes so you can take quick action. If you misplace your debit or credit card, call your financial institution or credit card company immediately or log in to your account online to stop transactions from going through. An important aspect of financial literacy for college students is developing responsibility toward your financial future. Diligently managing money in college will help you avoid overdrafts, late fees and identity theft and can help you learn the importance of living within your means when funds are tight.

Saving For College: A Quick Guide For Parents

If you’re a parent planning for your children’s future, saving for their college early is a wise investment to give them a head start. There are a variety of savings solutions for college education planning, but a 529 college savings plan gets especially high marks for its tax benefits and flexibility. The earnings are tax free if used for qualified higher education expenses. These plans can be set up for your children, grandchildren or even for yourself, and the person who opened the account has control of all funds in the account until they’re withdrawn. You and other family members can make contributions to the account to grow tax-free for your child’s future.

Before you start saving, there are two types of 529 plans to be aware of: savings and prepaid tuition. Savings plans are available in most states, while prepaid plans are less common. So what’s the difference between the two, and which one is best for your family?

Savings Plan For College

Think of a 529 college savings plan as an investment, with your earnings based on the performance of the stock market and your risk tolerance. These plans are offered by most states and can be obtained by working with a qualified financial advisor. Money in the account can be used for both undergraduate and graduate costs, including tuition, room and board and even computers at any accredited college or university. You can invest in any state’s 529 savings plan, and the earnings will not be subject to federal income taxes when used for qualified education costs. Learn more about 529 savings plan options for our local South Dakota and Iowa communities.

Prepaid Plan For College

Prepaid 529 plans for college allow you to pay money now to lock in future college costs, but they’re less widely available than the 529 college savings plans. Depending on the type of prepaid plan, the money you pay usually allows you to cover in-state tuition costs, although some plans might cover other expenses as well. And most prepaid plans have age or grade limits for the beneficiary. Since these plans are usually targeted at the schools offering them, make sure you check to see what your money-transfer options would be if your child or beneficiary chooses a different school to attend. Your payments lock in future college costs and the plan must make good on its promise.

Not only are 529 college plans attractive because their earnings are tax-free when used for qualified education expenses, but another big benefit is that large amounts of money can be deposited for the beneficiary (in excess of $300,000 for some plans). Contributions under $14,000 annually fall under the federal gift tax exclusion and a lump-sum deposit of up to $70,000 can be spread out over five years and still qualify. As part of any financial planning, make sure to always do your research on the options you have, and check with a trusted financial advisor on the various plans’ options and risk levels. Keep in mind that the money in a 529 account will have some effect on financial aid applications. Be sure to check with a financial advisor on how this is affected by federal or school rules.

Find Helpful Resources To Manage Money In College At Rivers Edge Bank

The journey to financial literacy for college students has to start somewhere, and there’s no better starting point than a student bank account, such as a checking or savings account, to keep your money safe, earn interest and provide peace of mind. Managing money in college is a lot easier when you have the tools and resources to keep track of your budget as a student and take ownership over your financial future. At your local Rivers Edge Bank, we always strive to be a resource for students with financial tips and savings solutions that work for you. Whether you’re looking to get started with a traditional checking or savings account or increase earning potential with a certificate of deposit (CD), reach out to us to open your bank account today.

Contact Your Local REB