Money-Management Advice for College Students

Every year at the end of the summer I take our Kiplinger interns out to lunch and ask them two general questions: What did you learn about personal finance during your time with us, and what advice would you give your fellow college students about managing money?

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Over the years, the answer to the first question has been nearly unanimous: Their number-one Kiplinger takeaway is to save for retirement. In fact, Ryan Ermey, a former intern who's now a full-time staff member, was contributing to the Kiplinger 401(k) plan even while he was on a shoestring budget as an intern and waiting tables on the side (see Smart Money Moves for Young Adults.

But our interns also teach us a thing or two. And if it's true that young people are more likely to take a lesson to heart if they hear it from their peers, then they (and their parents) can learn a lot from this summer's interns. Dylan Cunningham, a senior at the University of North Carolina at Chapel Hill, and Kathryn Moody, a senior at Indiana University, offer their fresh take on some tried-and-true advice.

Mind your expenses. Dylan's AP Economics teacher in high school included a lesson on budgeting during the last week of class, and "it has been more helpful on a day-to-day basis than any supply/demand curve I learned how to draw." Even if it seems like a hassle, Dylan says, "drawing up a budget in Excel can really go a long way toward helping you keep up with your finances."

Keep things simple. Dylan's Excel spreadsheet includes columns for basics such as rent, food, club dues and social expenses. "I won't say that I stick to my allocations 100% of the time, but even being somewhat organized about my money helps me understand what I can and can't afford to spend."

Be wary of online banking. Kathryn observes that online banking has made it convenient for students to check on their balances, but you can sometimes lose track of what you're spending along the way. "When you don't have to go through the rigmarole of writing down and adding up the numbers in your checkbook, it's easy to trick yourself into thinking that you haven't spent that much." She wonders whether having to write everything down makes people more aware of their outlays. (Note: Yes, Kathryn, it does. Writing things down, or even saving receipts, gives you a visual cue and makes spending more real -- much like handing over cash instead of using a credit card.)

Plan for unexpected expenses. "Weird things will crop up," says Kathryn. In her case, her car's transmission started to act up. Then her cat became ill, and she ran up a vet bill. "You might as well get used to putting aside rainy-day savings while you are young and still have your parents as a safety net."

Both Dylan and Kathryn stressed how important it is for students to have a financial stake in their education; the more parents pay for, the less worried or responsible students feel about their expenses. Dylan is fortunate to have a National Merit Scholarship. "It isn't very much money, but any little bit helps," he says. Kathryn, who lives in Kokomo, Ind., won a scholarship designated for residents of Logansport, Ind., because she was the nearest qualified applicant. "Apply, apply, apply," she recommends.

Kathryn uses scholarship funds and a small stipend she gets from working on student media to cover expenses. Dylan covers his expenses with summer earnings; while he was interning, he also waited tables on weekends. "I don't pay tuition or rent, but everything else -- utilities, groceries, membership dues, textbooks -- is on me, so I have to be aware of how I'm budgeting my money," says Dylan. "I can't say the same for students whose only concern is trying not to max out Daddy's credit card."

For the record, neither Kathryn nor Dylan has a credit card -- and so far they've done just fine without one.