Student loan debt immediately thrusts many graduates into a financial crunch. According to CNBC, the price to pay for a college education resurfaces in the form of student loan balances, and these costs affect about 25 percent of Americans. On average, grads have more than $37,000 in debt from college. U. S. News & World Report notes that tuition costs have increased more than 65 percent in the past decade for “public National Universities”—and that increase only accounts for in-state tuition! As tuition costs continue to rise, the amount needed to pay for a degree will only increase. Today’s college students need to begin to build savings early to prepare for their impending loan payments, and they also need to gain an understanding about how to budget and allocate their financial resources before they graduate and enter “the real world.” Here are a few tips for helping college students make money, and save money.
The first loan repayment may vary by loan type. Federal student loans typically offer a grace period that extends a few months after graduation, but private loans may stipulate an earlier due date. Regardless of the type of loan, every student should understand the loan obligations and the repayment process before the first payment is due. This means that you should know the minimum monthly payment so you can plan your budget accordingly.
Loan repayment costs are only a fraction of what new grads will pay each month just to survive. Car payments, rent, food, insurance (health and auto), gas, utilities and other expenses add to the budget bottom line. While many students currently tackle these costs already, some may receive help from parents while they are still in school.
If you’re looking at your income and expenses, and you realize you’re barely making ends meet, you aren’t alone. According to a report by CareerBuilder, a vast majority of American workers (78 percent) live paycheck-to-paycheck. So how do you get ahead? How do you save for future debt repayments and still have enough money to pay your other financial obligations?
The answer isn’t so black and white. To thrive—and not just survive—requires a financial surplus that allows for savings to accrue over time. This may mean taking on a second job, selling items you don’t need or other creative ways to make extra cash.
If you’re counting down the days until graduation, but you’re beginning to dread the thought of tackling that mountain of student loan debt along with all your other bills, here are 15 tips to make more money and save for unplanned emergency expenses (like a major car repair or hospital bill).
1. Make a Budget.
The first step to financial success is to create a monthly budget. Write down all your monthly expenses and then tally up your income. Ideally, your income should exceed your expenses. If you are overspending each month, you need to pinpoint where the cash drain originated. Do you spend too much on clothes? Eating out? Or do you just not have enough money for basics? A budget and a monthly financial audit of your expenses will help you see the big picture. And then you can try to fix any issues.
2. Start an Ebay or Etsy Store.
One of the easiest side jobs for extra cash is to begin a resale business for vintage or gently used items or even hand-crafted pieces. Etsy and Ebay are top sites for these business endeavors. Some resellers hunt for treasures at thrift stores and flip them on the resale market. However, you need to have a keen eye for what sells—and learn how to identify vintage items (if vintage is your market). Other online stores resell gently used name-brand clothing—the site Poshmark is ideal for this type of business. If you’re crafty and have an eye for design or fashion, you might even begin a business where you sell handmade goods like knitted accessories, hand painted items or even jewelry.
Whatever business model you choose for your ‘store,’ there are financial obligations for any business. You might need a separate insurance policy for liability issues, and many business owners also create a legal presence for their business in the form of a Limited Liability Corporation (LLC), partnership, etc. As the business owner, you will be responsible for paying any taxes on the profits from your sales—in some cases, you also may need to pay sales tax. Before you begin your own business venture, chat with your accountant and/or a business attorney to discuss legal and tax issues.
3. Save just a little each month.
Savings builds over time, and savings can—and should—start small. If you think that you need to save hundreds of dollars each month to make an impact, you’re wrong. Even five dollars or 20 dollars each month adds up over time. Get into the habit of saving a small amount each month to build your savings. Don’t have a savings account? Talk to your bank about starting one—some may require a minimum first deposit, but others may let you open an account with any amount!
4. Cash gifts go into savings!
Did grandma send you $100 for the holidays? Don’t spend it unless your need is dire—a new tire, an oil change, a prescription, etc. Instead, allocate all financial gifts to your savings account. This will allow you to accrue more savings over time, and that $100 will now grow into more money for the future.
5. Save those tax refunds, too!
Did the government send you a nice check for your tax refund this year? That isn’t spending money! Yes, a large payment from the government may have you thinking about a cool Spring Break trip or maybe a new outfit, but, again, these dollars should be saved not spent. Consider a tax refund to be the government’s reminder to save for those future loan payments! Thanks, Uncle Sam!
6. Resell books for quick cash.
Every semester you find yourself with used books that can be resold. While you might only receive pennies on the dollar at the school bookstore, every little bit helps when you need savings. If you’re feeling extra ambitious, you also can try to resell those books on other sites.
7. Get a job on campus.
If your parents are helping you out financially during college, but you still feel like you strapped for cash, then it’s time to take control of your finances. Finding a part-time job while you’re going to school can be a unique hunt. You’ll need an opportunity with flexible hours that don’t compete with classes, and many students find that working on campus is their best—and easiest—bet for a college job. Many campus jobs work with students to accommodate their class schedules. Check out the jobs page on your school’s web site to see if you can snag any on-campus opportunities!
8. Consider a night job.
Some college students also find jobs as night clerks at hotels/motels or even work as a barista during the evening hours. Most college towns have many businesses that clock unique hours. These businesses may offer ideal job opportunities that work with a student’s busy class schedule.
9. Cut out unnecessary costs.
If you want to grow that savings account, you can save money by cutting out unnecessary expenses. Do you really need both Netflix and Hulu? Can you downgrade your cell phone plan? If you like to eat out, then set a budget for those meals. Cut out gourmet coffee hot spots, and, instead, make your own brew at home. The money you cut is money that should be saved!
10. Trade retail for thrift.
Don’t want to completely cut that clothing budget? Trade those retail prices at higher end boutiques for thrift store prices. Many consignment stores and thrift stores carry brand-name and high-end designers for a fraction of the original retail sale price. You may have to hunt for what you want, but, sometimes, the hunt is the best part of the score!
11. Find a roommate to share living costs.
If you’re living on your own, you can cut living costs by hunting for a roommate. Your school may offer ways to find a roomie or you can place an ad in a local paper. Just be careful about vetting your choices (hint: ask for references and copies of bank statements), and you may want to use a site like Roommates.com or Roomiematch.com.
12. Take the bus.
Many college campuses offer a bus system that lets students buy a yearly pass for a discounted price. The busses may take you to campus or to local areas around town. Use the campus transit to cut your gas cost and save the mileage and wear and tear on your car.
13. Limit your partying costs.
It’s the weekend, so what are you going to do? Maybe head to a pub or bar with a friend? Those drinks are pricey. And, like eating out or expensive clothes, the weekend parties hit your budget hard. Yes, you should have fun. But if you want to save more money, you need to cut down on how much you spend on alcohol and clubs.
14. Drop the delivery charges.
Not many college kids cook, because why do you need to cook when there is an unlimited supply of pizza delivery and takeout drivers? Do those restaurants know your address and recognize the sound of your voice? Of course they do. But delivery charges and tips also add to the cost of that pizza, Thai takeout or sub sandwich. Convenience isn’t worth the price of paying for delivery. Instead, go through the drive-thru or buy a frozen pizza!
15. Use the credit card sparingly.
One of the easiest ways college kids get into financial trouble is by overusing their credit cards. A credit card is for emergency use only. Do not treat credit as cash or income—unless you want to pay a hefty monthly bill each month.
Student loan debt will be one of the largest monthly expenses for college graduates and tacking on that large monthly payment on top of other financial responsibilities leaves many new grads feeling money drained and frustrated. Prepare for those loan repayments before graduation by taking charge of your finances. Everyone can save money each month; there are always ways to cut expenses, to earn extra cash and to manage debt. Financial responsibility isn’t always fun, and taking charge of your income means making choices that often require a strong and thrifty willpower. However, making sacrifices now will mean that your financial future may be more manageable and a lot less stressful.