5 Good & Poor Financial Habits for College Student

5 Good & Poor Financial Habits for College Student

As a college student, it’s easy to get caught up in the excitement of newfound independence and forget about financial responsibility. However, developing good financial habits early on can set you up for a lifetime of financial success. In this article, we’ll discuss 5 financial habits every college student should develop.

Let’s dive into 5 important financial habits!

5 Good Financial Habits

1. Create a budget

Creating a budget is the cornerstone of financial responsibility. A budget is a plan for your income and expenses, which helps you track your spending, avoid overspending, and save money. To create a budget, list your income sources, including any part-time jobs, allowances, scholarships, or financial aid. Next, list your fixed expenses, such as rent, utilities, and tuition fees. Finally, list your variable costs: food, transportation, entertainment, and clothing. Be realistic and honest about your spending habits and adjust your budget as needed.

Several budgeting tools are available to help you stay on track, including apps like Mint, YNAB, or PocketGuard. These tools can sync with your bank account, categorize your expenses, and provide alerts or insights about your spending patterns.

You can download our budge excel sheet template as well!

2. Save Money on Textbooks

Textbooks can be a significant expense for college students, with some textbooks costing hundreds of dollars each. To save money on textbooks, consider renting or buying used or digital textbooks instead of purchasing new ones. You can also check your college library, online, or second-hand bookstores for more affordable options.

Another way to save money on textbooks is to join or create a study group with other students who are taking the same classes as you. By sharing textbooks or notes, you can split the costs and save money.

3. Avoid Credit Card Debt

Credit cards can be helpful instruments for establishing credit, making purchases, and collecting incentives. Yet, if not utilized correctly, they can lead to debt. A college student must understand how credit cards function and how to prevent credit card debt.

First, only use your credit card for necessary expenditures you can afford to pay off in full monthly. Avoid using your credit card for spontaneous purchases, and regularly check your credit card account for fraudulent charges or inaccuracies.

Second, understand the fees associated with credit cards, such as interest rates, late fees, and annual fees. Avoid carrying a balance on your credit card, as interest rates can accumulate quickly and lead to debt.

Finally, consider using a secured credit card if you’re new to credit or have a low credit score. Secured credit cards require a deposit upfront, which becomes your credit limit. This way, you can build credit without the risk of overspending.

4. Invest in a Retirement Plan

Retirement may seem far away, but starting planning is never too early. As a college student, you have a unique time advantage when investing. The earlier you start investing, the more time your money has to grow.

Consider investing in a retirement plan, such as a Roth IRA or 401(k) plan, if your employer offers one. These plans offer tax advantages and compound interest, meaning your money can grow exponentially.

You don’t need much money to start investing in a retirement plan. Even a small contribution each month can make a significant difference over time. For example, if you invest $100 a month in a retirement plan with an average return of 7% per year, you could have over $300,000 saved by the time you reach age 65.

5. Make Smart Decisions After Graduation

After graduation, you may face several financial decisions, such as paying off student loans, finding a job, or moving to a new city. To make intelligent financial decisions after graduation, it’s essential to understand your financial situation and goals clearly.

First, devise a strategy for repaying your student debts. Consider merging your debts to simplify your payments and decrease your interest rate. You may also consider repayment options, including income-driven repayment plans or loan forgiveness programs.

Second, think about your future employment possibilities and income expectations. Research the employment market in your sector and compare wages to obtain a realistic estimate of what you might anticipate earning. Consider the cost of living in the city or area where you want to work.

Third, make and stick to a budget. Recall your budgeting skills from college, keep track of your spending, and change your budget as needed.

Finally, continue to save for your future. Consider opening a savings account or investment account and continue to contribute to your retirement plan. Set goals for your savings and make a plan to achieve them.

5 Poor Financial Habits

1. Overspending on Unnecessary Items

One of college students’ most common poor financial habits is overspending on unnecessary items. With so many social events and temptations to spend money, it can be easy to overspend on clothes, food, and other non-essential items. To avoid this habit, it’s essential to create and stick to a budget. Make sure to prioritize necessities such as rent, food, and utilities and set aside a portion of your income for discretionary spending.

2. Relying Too Much on Credit Cards

Credit cards may be a handy tool for establishing credit and making transactions. However, using credit cards excessively might result in debt and financial hardship. College students should avoid using credit cards to finance everyday expenses and use them for emergencies or planned purchases. Paying off the debt in full every month is critical to prevent carrying a balance.

3. Ignoring Student Loans

Many college students rely on student loans to pay for their education, but ignoring them can lead to financial trouble in the future. Students should understand their loan terms, including interest rates and repayment plans, and make a plan to pay them off as soon as possible. Ignoring student loans can lead to missed payments, default, and damage to credit scores.

4. Not Saving for The Future

College students may not consider retirement or other long-term financial objectives, but it is critical to begin saving as soon as possible. Students can begin by creating a savings account or contributing to a retirement plan such as a 401(k) or IRA. Failure to save for the future might result in financial instability and missed opportunities.

5. Ignoring Financial Education

Ignoring financial education is a common poor financial habit among college students. Many students may not prioritize financial education or may not have access to resources to learn about personal finance. However, learning about financial literacy can help students make informed decisions and avoid poor financial habits. Students can take advantage of free resources such as financial blogs, podcasts, or classes offered by their school or community.


Developing good financial habits early on can set you up for a lifetime of financial success. Creating a budget, saving money on textbooks, avoiding credit card debt, investing in a retirement plan, and making smart financial decisions after graduation are all essential habits for college students to develop. Keep in mind that small changes can make a big difference over time, and it’s never too early to start planning for your financial future.