Updated: Jun 01, 2023

5 Brilliant Ways to Handle Finances Freshman Year That Will Help You Beat Future Debt

When it comes to finances freshman year, it's important to set a budget and not let your debt take over. Here are 5 ways you can beat it.
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The first year for a college student is an exciting and challenging time. With a new campus to explore, friends to make, and homework to complete (in between social time), it’s easy to feel overwhelmed as a first-year college student. Adjusting to the college life will take some time, but one thing that can’t wait is how to get a handle on your finances freshman year.

freshman finances image
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With students graduating college with more debt than ever before, first-year undergraduates must take the proper steps to ensure that they leave school with as little financial damage as possible. As you prepare to enter your first-year at college, take heed of this advice or you’ll pack on more than just 15 pounds your freshman year -- you could gain tons of debt.

Here are the first five points every first-year college student should add to their financial checklist:

1. Stick to a budget

However you finance your higher education, if you’re like most college students, you won’t be able to pay for everything. Chances are high that you’ll probably have to take out some loans, too. Over the past decade, the total number of federal student loan borrowers increased from 5.9 million in 2002-2003 to nearly 10 million in 2012-2013, according to the College Board. That’s an increase of 69 percent.

It’s very easy for your finances to spiral out of control in college. Even before heading off to school, you can easily waste a few thousand bucks buying unnecessary dorm gear, choosing a heavy meal plan that you don't use, or bringing your car to school when public transportation is perfectly acceptable your first year. Then there are actual costs to attend school. Tuition alone will set you back thousands of dollars. Throw in textbooks, room and board, food -- all of a sudden you’re thousands of dollars in debt. And we haven’t even gotten to discretionary spending.

Before you end up adding unnecessary debt to your first year in college, set up a budget. Unfortunately, many young adults aren’t ever taught how to budget. If you weren’t taught about personal finance basics at home, hopefully you attended a high school in one of the 17 states that require students to take courses in personal finance. If not, it’s easy to learn how to budget.

Creating and sticking to a budget is perhaps one of the most important things you can do as a college student because that one action will help guide your financial decisions for the rest of the year. If you are looking to create a budget for your first year in college, here are expenses you need to consider: room and board, tuition, one-time expenses (computer, dorm furnishings), fees (campus, technology, orientation), books, personal expenses (laundry, medical, club memberships, hygiene, clothing, travel). Basically, list every cost you expect to have your first year and start creating your budget. Then, be sure to stick to it.

2. Watch out for credit cards

Having a credit card as a first-year college student is certainly not a bad idea. After all, you’ll be far away from home and there might be situations where you need quick access to cash. Maybe you brought your car to campus and need to fix a problem or you have a medical issue.

Credit cards are a great way to build your credit -- as long as you handle them responsibly. Unfortunately, many college students -- not just freshman -- make foolish credit card mistakes that exacerbate their financial situations. Among these common mistakes: getting too many credit cards, not keeping track of spending, forgetting to pay the bill on time, or treating credit cards like free money. You will have to pay for every swipe you make.

College kids are particularly vulnerable because issuers view students as a prime target. As a first-year college student, you’re probably financially inexperienced, which some credit card issuers will use to their advantage. Fortunately, the Credit Card Accountability, Responsibility, and Disclosure Act helped to restrict some of the marketing techniques that some issuers used to get students to sign up for a card. These protections include banning using gifts to entice college students under 21 to sign up and preventing issuers from extending credit to someone under 21 unless they have an adult co-signer or can prove their ability to make payments.

Despite these protections, as a first-year student you will have plenty of opportunities to sign up for a credit card. In 2012, 45,519 college-affiliated credit card accounts were opened, which is 18 percent less than the 55,747 accounts opened in 2009. In all, students, alumni and other cardholders held more than 1.2 million college-affiliated credit card accounts in 2012. Though college credit card agreements are on the decline, enough students have signed up that the Consumer Financial Protection Bureau has called upon financial institutions to publicly disclose agreements they have with colleges to market debit, prepaid and other products to college students.

“Students and their families should know if their school, whether well-intentioned or not, is being compensated to encourage students to use a specific account or card product,” said CFPB Director Richard Cordray. “When financial institutions secretly give kickbacks to schools, they are engaging in risky practices.”

It may be tempting for you to sign up for a credit card because your school endorses it, but that shouldn’t factor into your decision whatsoever. The card your school offers might not have the best rates for your lifestyle. As you consider signing up for a credit card, keep the following tips in mind. Be wary of any credit card issuers who offer any sign-up bonuses to you near campus. Pay off your credit card balance each month. If you can’t do that, pay off as much as possible. Pay your bill on time. And pay attention to any changes in your terms of agreement. Also, it’s a good idea to consult your parents and choose a card together. Whichever credit card you end up signing up for, remember that when you apply for credit, you’re asking for debt.

3. Pay less for textbooks

On your first week of classes as a first-year student, you should receive syllabi from your professors outlining books that you need to purchase for the term. Right off the bat, that will be hundreds of dollars that you’ll have to fork over for school. While you might be tempted to buy textbooks before your first day of class, wait until you attend the class. In some classes, the textbook might not really be used.

Textbooks are a big cost for most college students and you have to buy them every term. According to the most recent data available from the National Association of College Stores, college students spent an average of $370 on required course materials for the fall 2013 term. Required materials include books or media. The NACS says less than half of college students purchase their required course materials through the college store. And you should not be one of them.

There’s no reason to pay full price for a textbook at your college store when there are many other options you can pursue. Affordable textbooks can be found online. You might also consider renting your book, seeing if it’s available in PDF format, sharing with a friend, renting it out from the library, or tracking down students from last semester who might have a copy. If you must buy them through your college bookstore, check to see if you can purchase them used.

4. Save your money

College is expensive enough already without you wasting money left and right. Now that you’ve set up your budget, it’s time to stick to it. It’s not realistic to ask a first-year college student to spend nothing for fun. After all, you want to explore your college town, get involved in the community, perhaps join a sports league or participate in an extracurricular activity. These things will cost money. And that’s OK. Where many first-year students get into trouble is not setting limits. You don’t have to go out and eat every day, especially if you have a meal plan. You don’t have to purchase the heaviest meal plan. You don’t have to spend a ton driving around if you can take public transportation. And you don’t have to use all your money just because it’s there. In fact, you should be saving some of it.

The idea of saving as a college student might sound completely foreign, but it’s possible if you’re disciplined. There are ways to do it, both big and small. If you’re thinking big picture, you might consider taking classes at a local community college to save money on your first year or two. If your college offers discounts on early payment of tuition, you might try to take advantage of it.

You can get a part-time job or leave the car at home. You might even consider living at home. Small ways to save money as a first-year college student include taking advantage of perks you might get because you’re a student, making your lunch instead of buying it, buying drinks and water in bulk and storing the beverages in your dorm, and buying used whenever possible.


5. Earn money

If you’re worried about how you’re going to pay for college, you’re going to need to earn extra income. Even if you can pay your tuition and lodging with your student loans, earning extra income certainly won’t hurt. Particularly because you might have read some of the statistics about student debt. Like, the fact that the class of 2014 graduated as the most indebted ever, with an average of $33,000 in debt. Or that 70 percent of the college students who graduated with bachelor’s degrees last year left college with debt.

Deciding whether you want to get a job your first year is a decision you have to make. Many first-year students forego getting a job to get used to campus and the college routine. Others want to earn money, and some simply have to work. The most important thing you have to do as a college student is get your schoolwork done, so before you even consider working, make sure you can handle the workload of the classroom.

If you can handle working part-time, you might consider signing up for something like TaskRabbit or Errund to offer your skills or services. There are other jobs that you can do from your dorm room -- stuff like telemarketing or data entry. You might consider becoming a babysitter, waiting tables, walking dogs, or selling your class notes. Be sure to check your campus job board to see what positions are available. Also, if your school’s psychology department pays for you to participate in studies that’s one quick way to earn some bucks.

If you follow these five tips, you’ll start your first year off on the right financial foot. Be sure to check out five more tips every college freshman should check off their financial checklist.