Personal Finance For Students: A Key Guide

Finance for students

Being a student is tough. But studying and grades are just part of the picture. In addition to balancing school and perhaps work, another thing you’ll have to consider is your finances. College is not free — even if you were lucky enough to get a full-ride scholarship. Luckily, we’re here to break down every aspect of finance for students so you can manage your money before, during, and after school.

The importance of managing personal finance for students

Understanding the core financial concepts and knowing how to plan and manage your finances as a student can make all the difference to your future. So many students come of out college without a plan for their finances or for their student loans.

They get a steady job and consistent paycheck and lifestyle inflation sets in. As a result, saving, investing, and paying off debt becomes so much harder.

However, by setting a solid financial foundation as a student, you can put yourself in the position to be successful with your finances in the future! So that being said, let's get to the key things you need to keep in mind when it comes to personal finance for students! (Be sure to check out our advice to students on college life, and more!).


The first thing to think about as a student? Budgeting. After all, you don’t want to live on the stereotypical ramen diet all through senior year. By creating a budget, you’ll be able to create good financial habits and make sure you have enough money to pay for your life beyond tuition.

How to anticipate and track expenses

Your first step in creating a budget will be to track your expenses. There are a number of ways to do this, so it all depends on what you find easiest. Many people use a spreadsheet to record everything they spend money on, while others might make a list of their purchases.

We recommend checking your credit card account statements every month to see what you’ve spent and in what categories. Once you determine your fixed costs (tuition payments, rent, meal plans, etc.), you’ll have a better idea of how much you have left to spend on a monthly basis.

Leaving room for discretionary spending

Knowing the exact amount you pay in fixed costs every month is good because it allows you to leave a little room for discretionary spending. After all, part of college is having fun. Try to leave a little pocket cash for drinks with friends or a late-night pizza. Just make sure it’s not too much — we’ll get into that more in the savings section.

Look for ways to save

One way you can loosen your budget and have a little extra money on hand is to cut down on costs. There are tons of ways to do this, some of which you might already be doing. We also have some great ideas on passive income for students to help you bring in some extra cash.

Always buy used textbooks instead of new ones (and resell those textbooks when you’re done), skip the expensive on-campus meal plan and cook yourself instead, or shop at thrift stores to save on new clothes. By the way, also check out our key tips on how to create a college student budget you'll actually use.

Emergency savings

When you’re creating a budget, it’s imperative to dedicate a portion of your expenses to emergency savings. This may take away from some of your discretionary spending, but it will be worth it in the end.

Why emergency savings is important

Only 41% of Americans have enough saved away for a $1,000 emergency, which can put you in an extremely dangerous place. Simply put, you never know what unexpected medical or repair bill will come up.

If you don’t have the cash on hand to cover it, you may need to pull it from your tuition fund or use a credit card to cover the costs. Needless to say, this can have drastic consequences for your future like dropping your credit score or throwing you into debt.

Put away a little each month

So how can you get started on your emergency savings fund? We suggest saving a little bit at a time, maybe setting aside 10% of every work-study paycheck. That way, you’ll still be able to pay your bills and have fun, but you’ll be more prepared for the future.

Once you get in the real world, your goal will be to save three to six months’ worth of income. But since you’re still a student, trying for $1,000 is a great place to start. You can also look into apps that round up all of your purchases and put the extra in savings so it becomes an automatic process.

Create a special emergency high-interest savings account

You’ll want to keep your money in an account that’s easily accessible and liquid so you’ll always have access to it when you need it. That means a high-interest savings account can be a good choice. That way, you’ll gain interest on what you’ve saved.

The key thing? Never touch this account unless it’s a true emergency. And skip checking accounts, because you may be tempted to use the connected debit card on a rainy day.

Credit cards

Speaking of credit cards… do you have one already? Unfortunately, research shows that 36% of U.S. college students have more than $1,000 in credit card debt. Yikes! However, when used responsibly, credit cards can have a ton of benefits.

Benefits of student credit cards

Student credit cards are amazing for building your credit score. Since you’re a student who probably hasn’t proved themselves much to creditors, your score will be low or non-existent. Getting a card, making a few purchases, and paying off the balance every month will have your score rising in no time. Credit cards are also good for helping you establish good spending habits and helping you earn cashback or other rewards.

What to look for in a student credit card

Sold on the idea of a credit card? Good! Now you need to know what to look for in a card. Believe us, not all cards are the same. In particular, you’ll want to look for student cards catered to your unique situation.

What does that look like? A good student card might offer you rewards for getting good grades. It also won’t come with an annual fee (because who has room in the budget for that?). It might have a 0% intro APR (good for if you need to make a big computer purchase but can’t pay for it all upfront). And will give you points for your everyday spending (1X point for every dollar spent is common, but more than that is great).

Tips for spending with a credit card

There are a number of ways to use your credit card responsibly, including not spending more than you have, always paying off your balance in full, and only using part of your available credit. If you don’t follow these tips, your credit score will drop, and you’ll find yourself deep in debt.

Remember, your card’s APR will be charged on any unpaid balances each month, meaning your $100 in charges could quickly become several hundred dollars over the course of a few months. Check out our tips for getting rid of college student credit card debt.

Student loans

Ah, student loans. You probably have a love-hate relationship with them. You need them to enroll in classes, but you dread the day your payments will start. We’ll explain them a little more so you understand how they work.

The different types of student loans

There are two main types of student loans — federal and private.

Federal student loans are more common, and they may offer better terms than a private loan (which comes from a bank and is provided to you based on your credit score). There are three main types of federal student loans — direct subsidized, direct unsubsidized, and Direct PLUS.

Direct unsubsidized loans are given to students with financial needs, and interest won’t start accruing until six months after you graduate. Direct subsidized loans are for anyone, but interest starts accruing as soon as you take out the loan. Finally, direct PLUS loans are loans your parents take out to help you.

Should you cosign?

If your parents don’t qualify for a Direct PLUS loan, there is another way they can help you out — cosigning. Cosigning is basically when you get a second party to sign off on a loan. The pros? You’ll be able to get a much bigger loan this way.

However, the downsides can be pretty bad. First, if you default on the loan, it’s not just you that’s responsible — the cosigner will also be on the hook. This can put a big dent in their credit score and put them in financial trouble. At the end of the day, cosigning is an option that you should really talk over with everyone involved before going for it.

Paying back your student loans

As of December 2020, students across the U.S. owed a total of $1.704 trillion dollars in student loans, so you aren’t the only one looking for tips on paying back student loans. One thing we suggest is negotiating a payment plan that works for you. The default option for federal loans is 10 years, but you may be able to qualify for income-driven repayment plans with a longer term.

Of course, the best way to tackle your student loans head-on is to make extra payments. Even if you just pay $100 extra a month on a $10,000 loan with a 4.5% interest rate, you’ll be finished paying off the loan five years early. If all else fails, refinancing is another possible option.

This is when you take out a new loan to pay off the old one, hopefully with better terms. This might be a good idea if you have improved your credit score since taking out your original loans. Get more specific advice about student loans in this article.


Investing might sound tricky, especially if you have a mountain of student loans waiting for you on the other side of graduation. However, there are plenty of ways you can put your money to good use by investing while you’re getting your education.

Student savings accounts

Student savings accounts are a great place to store your money while getting a little something back. Key things to look for? Make sure any account you open has no minimum balance requirement and no fees.

Online features may also be helpful since you’ll likely be away from home during the semester. Plus, online banks often have higher interest rates, earning you more passive cash.

CDs or bonds

if you can find a good rate, CDs or bonds are good for the money that you don’t need to touch for a few years. CD stands for certificate of deposit, and it’s a type of investment that gives you a fixed term (generally between three months and five years) with a fixed interest rate. You’ll get your money back plus interest at the end of the term.

Bonds are similar, but they’re not issued by banks. Instead, they’re offered by the government or other companies looking to raise funds. Like certificates of deposit (CDs), they come with fixed terms and interest rates.

Free or low-cost brokers

Free and low-cost brokers can be good for buying stocks you think will go up in the future. Just keep in mind — stocks are not FDIC-insured, meaning you could lose all your money if the company you’re backing goes out of business. Still, if you’re ready to play around, try Acorns or Fidelity Investments, as these allow you to get started with no extra fees.


Insurance is one area of finance for students that are often overlooked. That’s because it’s typically only used in worst-case scenarios, which is something none of us wants to think about. However, it's better to be prepared when life happens.

Student health insurance

Your college will likely require you to have health insurance before enrolling. Still, up to 9.2% of undergraduate students don’t have health insurance. Luckily, current U.S. laws allow you to stay on your parent's healthcare plan until you turn 26.

If your parents don’t have insurance or you don’t qualify for their plan, check the Healthcare Marketplace. Here, you’ll be able to browse a variety of options and find a plan that meets your budget.

Student car insurance

Have a car? You’ll likely become the go-to driver for your dorm, so you’ll need car insurance. See if you qualify for a discount for being a student. Many insurance providers even offer discounts for getting good grades.

Even if you are the local chauffeur, you may not drive as much as you usually do. If that’s the case, many insurers will lower your premium based on the number of miles you expect to drive.

Student renters insurance

Renting an off-campus apartment? Don’t forget renters insurance to cover any mishaps. Some landlords will require it, especially when renting to young adults.

Even if you’re responsible, there’s no telling what could happen if you decide to host a college party. Renters insurance covers theft, fire damage, storm damage, and more, which can help you recover easier.

Buying a car

You might not need a car freshman year, but as you start applying for off-campus internships and jobs as you get older, a car will become essential. It might be tricky to manage the payments as a student, but not impossible.

Find a car that won’t break the bank

First and foremost, find a car you can afford. A good rule is to keep your monthly payment, including insurance and interest costs, at no more than 10% of your monthly budget.

As a college kid, this can be quite low, so you may want to look for used options instead of something brand new. That said, don’t go too old, as there’s a higher chance you’ll be burdened with hefty repair bills.

Browse sites like Autolist, CarGurus, and AutoTrader to price shop and compare before heading to a local dealer. Also, keep in mind that cars are depreciating assets.

Work on building your credit score

Want a pro tip for spending less on a car? Get a higher credit score. With a higher credit score, you’ll get better financing for your car. This will save you a ton of interest over the years.

Save for a down payment

You probably won’t be able to buy a car outright, so make sure you have a car down payment ready. Ideally, your down payment should be at least 20% so you can save on interest in the long run.

Salary negotiation

Getting your first job out of school is exciting and scary! That said, it’s important to make sure you’re ready to fight for your rights before taking any old offer.

Don’t take your first offer

It’s tempting to immediately accept the first salary you’re offered, but make sure it meets your needs. Be prepared for a little pushback, but don’t settle for less than you know you’re worth.

This is a risk, and you may even end up losing the job. That said, a lot of employers will respect applicants who fight for what they believe in.

Research what others make in your field

The biggest tool in your arsenal during a salary negotiation is knowledge. You need to get a good base for comparing what other entry-level employees make at similar jobs using Glassdoor or other sites. You can’t just assume you’re worth $100,000 straight out of college, even if that’s what you want to be making.

For students who graduated in 2019, the average starting salary across all majors was $51,347. That said, majors like computer science and engineering can earn considerably more than someone who studied social sciences or business.

Avoid naming your price first

Employers often want you to name your expected salary so you come in lower. They’ll assume since this is your first job that you’ll be meek and make an offer that’s low so you can make sure you get their job. Don’t fall into this trap.

Ask them about their budget first before naming a price so you don’t lowball yourself. If they refuse, use the research you gathered previously to quote a salary on the higher end of the budget. That way, you’ll still have some wiggle room to play within negotiations.

Understanding finance for students

Starting good financial habits young in life is crucial for preparing for what comes next, like buying a house, saving for retirement, and even having a kid. By using this guide, you’ll be well on your way to having a good financial head on your shoulders.

We also have some great affirmations for students to help you keep your mindset positive!

That said, if you need a little more help, feel free to consider our 100% free personal finance courses and resources. These free tools can help make your finance woes a thing of the past!

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