MARCH 2008 :: ON CAMPUS

Your Money, Your Responsibility
Being a Student Can Be Expensive, but It Doesn't Have to Ruin You

By Emma Slayton
Special to The Classroom Edition

Recently, on a ride from the airport back to campus after a break, I overheard a college student talking about a tough decision she had to make: whether to get her car fixed or pay for food for the next month.

College is full of tough decisions, but that seemed like a particularly difficult spot for a 19- or 20-year-old to be in.

It doesn't have to be that way. College can be expensive, with lots of little temptations to go along with the regular costs of room, board, books and supplies. But it doesn't have to financially destructive if you're good at setting priorities, tracking expenses and resisting the urge to splurge.

Cutting Back

Being in college means understanding money differently. In high school, for most of us, money was nice to think about but not something to worry about. Mostly, we focused on schoolwork, and possibly holding down a job for extra spending cash. Since we usually didn't carry credit cards, we had a good idea of how much money we had available at any given time: It was the amount we had in our wallets. So we wouldn't find ourselves in situations where a little overspending would land us in debt or leave us unable to pay for necessities such as meals, heat and car repairs in the future. For the most part, we left it to our parents to worry about those things.

In college, I find that I spend money on a lot of the same things: food, drinks, movie tickets. But there are countless other expenses that seem small but quickly add up, like cover charges for weekend parties and trips to the vending machine.

When you're at home, everything in the fridge is free. In college, an off-hours snack will cost you money. At home, I used to go through cans of soda like it was tap water. Now, I've got to cut back and find other ways to slake my thirst.

And for the first time, I actually have to balance my discretionary spending on things like sodas and movie tickets with mandatory spending on items such as textbooks.

My main money problem is food. Usually I'm pretty good about my spending, but when it comes to buying a Coke or a candy bar form the vending machines, I just don't keep track. So often, I've found myself borrowing singles from friends when I'm craving a snack. That is, I'm getting into debt for the sake of having a bottle of sugar, water and caffeine.

The debts are small, but this is not a position I want to be in. And I realize that if I don't check this behavior now, it could lead to bigger problems later. The students most likely to have problems with debt are those who "overspend and don't necessarily see it that way, " says Sergio Garcia, a volunteer counselor at Red to Black, a student-run program at Texas Tech University that provides students with financial-literacy education and credit counseling.

Of course, no one plans to be neck-deep in debt as a college student. We sign up for credit cards during freshman year to start building our credit and pledge to use them only for "emergencies." But then we end up eating lots of "emergency" pizzas and buying "emergency" shoes. A 2002 study by 360 Youth and Harris Interactive found that college students spend an average of $287 a month on discretionary items like concerts, DVDs and junk food. Spending money, especially on fun and luxuries, happens to be one of the ways we college students unwind from the stress of school and exercise our independence as adults.

So it's not surprising that students, and freshmen in particular, are the prime targets of credit-card companies. According to a 2004 study by Nellie Mae, a student-loan company, freshmen with credit cards carry an average of about $1,500 in debt, and this debt tends to swell as they progress through school.

In the scheme of things, my money woes are small. I'm just a freshman in the dorms, with a meal plan that my parents pay for, and I'm occasionally a few bucks short at the vending machine. Not a big deal. But I know that the right time to start being disciplined about money is now, before I'm an upperclassman living off campus, having to think about rent, utilities and car repairs. Having fun in college is important, but spending so much on it that I have to worry about how to afford necessities like books would ruin the whole experience.

One way to stay disciplined is to keeping track of every single dollar you spend, in a little pocket notebook or a spreadsheet on your computer, with a running tally of your cumulative monthly expenses. Save the receipt from every cash and credit-card purchase you make, and remember the vending-machine stops, too. This might seem awfully tedious, but seeing the effects of your spending habits in black and white can serve as a powerful check on impulse purchases and unwise use of credit cards.

Having a credit card in college is useful. You can, in fact, build up your credit and be prepared for emergencies. And you won't have to walk into the bookstore with wads of cash. But for a college student, one is enough. If you're having trouble with one card, you don't need to have problems with another, especially if it means using a second credit card to pay off your first.

The Right Attitude

Alot of your spending habits are affected by the people you hang around with. When shelling out money for the concerts, parties or what ever else you're doing on a Saturday night with friends, remember that you're the one who's going to be paying for it, possibly years from now, with interest. And just as you can be led astray by pressure from big-spending friends, you can also gain insight from the careful ones.

My friend Sharon Bergman and I were talking recently about a concert I'm planning on going to. She was really excited about joining me, until I mentioned the ticket price: $50. "I don't think I can go," she decided. "That's way too much." Sharon was planning to go to a different concert at the end of the month and couldn't afford both. She had the right attitude. By deciding to choose between different outlets for fun, she found a way to keep within her budget.

Before you even head off to college, it's a good idea to have a serious talk with your parents about money. Take that opportunity to learn about how credit cards and banking work, and how much support you can expect from them over the course of the year. My parents made it very clear to me that credit cards aren't free money-eventually you have to pay for what you charge, and with interest charges and fees, you pay for much more than that. They told me about limiting the number of credit cards I have, and they set up one for me under their account. Other parents offer their children a prepaid credit card, which they can load up with a certain amount of money ahead of time. This way, you have money available to spend, but you can't spend your way into debt.

If you do find yourself sinking into a debt hole, stop digging and get help fast. Many colleges have programs like Texas Tech's Red to Black that can help you learn money-management skills, analyze your own finances and develop a plan to live within your means.

"You are a student," says Red to Black's Mr. Garcia. "You can't live as a professional."