Money Management for College Students: Answering Your Questions

Money SmartsSeptember 20, 2024

Between tuition, books, room and board, and meal plans, college costs can add up quickly. Managing your finances as a student can be challenging, but you don’t have to do it on your own.

Below, we answered the top questions students submitted to the GLCU Foundation for Financial Empowerment as part of our recent scholarship application process. Read on to learn more about college student finances, key financial terms, and more.

What Should Students Focus on as They Prepare for College?

As you’re getting ready to start the school year, here are a few things to consider:

  • Create a Budget: Setting a budget can help you keep track of your expenses and the money you have coming in. Some items to include in your budget are fraternity or sorority dues, rent, food, utilities, books, and school supplies. Remember to review your budget as your expenses change and set aside money for unexpected expenses.
  • Apply for financial aid: Review the loans, grants, and scholarships you can receive to pay for your education. Work-study jobs offered on campus can also help offset your educational expenses.
  • Learn to prioritize needs and wants: Given that going to college is the first time that many people are out on their own and responsible for their own expenses, it can be difficult to balance needs and wants, especially if your budget is different than your friends’. Prioritize the things you need to spend money on (bills, supplies, etc.) before you buy the things you want (entertainment, dining out, etc.).

It’s common to feel pressured by friends and social media to spend beyond your means (this is often called “keeping up with the Joneses”). However, budgeting for the things you want can help you not overspend. Consider setting boundaries for yourself so you don’t blow your budget.

What Is Some Common Terminology I Should Know?

Here’s some background on a few of the financial terms you may encounter on your financial journey:

  • Credit Score: You can think of a credit score as a report card that shows financial institutions how likely you are to pay back a loan or credit card. Credit scores range from 300 to 850, with a credit score of 700 being considered “good.” The better credit score you have, the more likely you are to be approved for credit cards and loans. Chances are, you’ll also receive better terms.
  • Annual Percentage Rate (APR): APR stands for “annual percentage rate.” APR is the cost you’ll pay each year (including fees) expressed as a percentage. This rate reflects the amount of interest you’ll pay on loans or credit card balances. For example, a credit card may have a 24.99% APR, and a car loan may have an 8.99% APR. The lower the APR, the less you pay over the life of the loan.
  • Annual Percentage Yield (APY): APY stands for “annual percentage yield.” APY refers to the amount of interest or dividends earned yearly on savings accounts or other investments. The higher the APY, the more interest or dividends you’ll earn.

How Does Applying for a Credit Card Affect My Credit Score?

Another part of transitioning to a more financially independent lifestyle in college is applying for a credit card. There are a lot of factors to consider when applying for a credit card, including if it can affect your credit score to apply for one. The answer is: yes, it can. When applying for a credit card, it can trigger a “hard inquiry” on your credit report.

Multiple hard inquiries within a short period of time can negatively impact your credit score, so be mindful when applying for new credit cards, and do your research on the terms, APR, and fees.

Giving Student Finances the Old College Try

Navigating the financial side of college can feel overwhelming, but armed with the right tools and knowledge, you can set yourself up for success. By making informed decisions and setting boundaries for spending, you can feel more confident and secure in your financial choices.

As a not-for-profit credit union, GLCU empowers its members through community giveback programs, financial education, volunteerism, and competitive interest rates. Learn more about our scholarships and student loans, and check out our college resource center.If you or someone you know needs help with college financial planning, contact us.

The information in this post is for educational and informational purposes only and does not constitute investment or financial advice. You should consult a licensed financial advisor before investing in any financial product or service.

*APY = Annual Percentage Yield.

*APR=Annual Percentage Rate.

« Back to Articles