How a spending plan can help you make the grade.
On a corner near the University of Alabama campus, a Regions branch caters to college students who may stop in to open a checking account, savings account or other product.
But often, college-age customers drop by because they have a cash flow problem, according to Alisha Jones, who serves as branch manager and assistant vice president. “I have a lot of student interactions,” says Jones, who teaches Regions’ financial literacy curriculum in the university’s business school and offers personal finance advice and guidance through the Regions Next Step program. “And I always tell students that I strive to understand as much as I can about their finances in order to provide the advice and guidance they need.”
One thing that Jones has learned is that, as college students, your financial needs are often unique. For example, some of the biggest costs in your daily life—groceries, utilities, rent, even dining out—might be split with friends or classmates. That means you might spend more time transferring money via peer-to-peer apps, which can make it easy to transfer money but also complicate your budget tracking. And that’s just one example, says Jones. “What’s essential for any college student is putting together a financial plan that works for your specific needs,” she says. Here’s where to start.
Budgeting to the Rescue
While you likely know that you are in the process of building a credit history, in order to keep your credit in good shape, you need to keep your credit card balances in check. Today’s industry regulations don’t allow as many students to qualify for their own credit cards, but if you do qualify, you’ll want to be responsible with how you use them.
To solve cash flow issues, credit isn’t always the solution. Often, budgeting is. “Some say, ‘I don’t have time to or don’t know how to manage my money.’” Jones says. “They’re often more reactionary than proactive.”
Counting the Costs
Not budgeting can have a snowball effect. According to Jones, a $7 meal at a popular spot where students go for late-night grub can end up costing $35 more with an overdraft fee if they swipe or spend money with insufficient funds in their checking account. Interest and fees can add up.
Bankers like Jones help students rebound after a budgetary bind. “Many students manage money responsibly, but for those without the skills it can be a challenge. Until they go through it, or a friend goes through it, they don’t understand why it’s important to actively manage your bank account,” she says. After a few months of trial and error, students may sit across from her desk, earnestly seeking budgeting advice. Here’s what she tells them.
Start by Tracking Fixed and Variable Expenses
Track what you spend for a week or two before you even try to budget—and categorize expenses by fixed vs. variable costs. “Fixed expenses are hardest to manipulate,” Jones says, pointing to rent, car payments, tuition and the like. Variable expenses, well, vary. An financially-savvy Alabama student, for instance, controls how often they dine out, where they buy clothes and whether they go the SEC or national championship football game that year. More control means more to track. “That’s where you can reevaluate every money decision,” Jones says.
To help, Regions offers customers My GreenInsights, a tool to help you track spending, set limits and establish goals, along with a budget calculator, which is available to everyone at no-cost.
Pay Yourself First
Jones recommends putting 10% of your income into savings—and classify it as an expense. It comes directly out of your income, potentially turning into a big asset over time. “You’re equipping yourself for the future,” she says. “Don’t dip into it for a ticket to a concert.” Save toward any goal you choose—but also for emergencies, such as car repairs and medical bills you didn’t see coming.
Use Smart Banking Services and Tools
From joint checking accounts to co-signing on a credit card, parents can help college students learn to manage money with a safety net.
Regions also offers free checking accounts and no-fee savings accounts. There’s an option that allows an annual saving bonus, rewarding you with 1% of what you save if you contribute once a month for 12 months. Jones knew a student who set up multiple savings accounts using this strategy, saving enough to buy a rental property that produces a solid income stream.
You can also use a spend-and-save strategy with accounts. Elect to round up transactions to the next dollar and siphon the difference into your savings or customize an amount sent to savings—such as $3 every time you swipe a debit card. “It’s can be a lot more motivating for students to begin saving once they find a method that works for them,” Jones says.
Look at Budgeting in College as a Trial Run
Students should budget even if they have a meager income and few expenses. “Regions is here to answer questions and provide money-management tips to help students. No one suddenly wakes up one day as an expert at personal finance,” Jones says.
Parents can help their children, who are digital natives, understand the concept of a checkbook register by putting pencil to paper or creating an Excel spreadsheet to show that diminishing balance. “It can be as low-tech as the back of an envelope,” Jones says. “But somehow convey that with every purchase of yoga pants or every streaming subscription, a balance decreases. When you look at your available account balance online, the amount is not always updated in real time, so it’s important to track what you’re actually spending.”
Have a Conversation with a Banker
Students should visit their local branch. The solutions available to you are wide, and a banker can help you navigate all your options. You might consider using deposit-secured products to keep savings intact if an unexpected expense arises. If your parents want to help, they can make you an authorized signer on a credit card, which will also help you establish credit history with less risk.
While it’s great to have a banker you can turn to, online courses and personal finance tools like Regions Next Step for Students can help promote financial literacy, as well.
Budgeting for All
Whether you are fully funded by parents back home or paying your own way through school via a work-study program, those who learn to budget in college can start post-college life with a solid financial habit.
Three Things to Do
- Learn more about getting a customized financial plan from Regions.
- Prepare for some of the unexpected expenses that you might encounter.
- Spend wisely with a prepaid credit card.
