Financial Wellbeing Guide for New College Students

I recently helped organize the University of California, Berkeley (Cal) Summer Welcome Party for new students from Sacramento, California put on by the Sacramento Chapter of the Cal Alumni Association. I remember the exciting and daunting days of going to University and was happy to lend a supportive hand in welcoming new students and their families. The event went well and I sat down with several students and their family members to answer questions about the Cal experience. There was a diverse range of new students from transfer students to first-generation attendees to even a student whose sibling went to Cal’s rival college, Stanford University!

 

New Student Nerves

 

While adjusting to a new place, meeting new friends, and navigating a different educational system can be daunting, I was encouraged to hear students voicing their concerns about finances during their undergraduate experience. They asked important questions about maintaining grants and scholarships, securing work experience, and finding paid internships or other financial support. This made me reflect on my own college experience and how little I knew about finances beyond filling out the FAFSA. At the time, it felt like a world best left to adults, which ultimately limited me. I avoided seeking out opportunities that could have offset my university costs and helped me build financial wealth early on. Instead, I ended up taking out approximately $40,000 in loans to cover my master’s degree in social work. I wish someone had told me then, 'You are worth it—here are some ways to find the money to support the great work you’re going to do at UC Berkeley and beyond.' It is important to establish a financial foundation. You are worth it! 

 

A Financially Forward Guide

 

In this guide, you will learn the myths of money and being a new college student, how to harness and cultivate your money mindset, understand your financial situation, basic budgeting, manage debt and credit, save and invest, seek financial aid and scholarships, learn how to access employment and income opportunities, prioritize financial wellbeing and self-care, and a list of resources to get you on a path to financial success. 

 

Common new college student and money myths

 

Let’s spend a few minutes highlighting money myths for new college students.

• Myth 1: College Students Don't Need to Worry About Money Yet

Reality: Financial habits formed during college can have long-lasting effects. Students need to start managing their money early to avoid future financial difficulties.

• Myth 2: Student Loans Are Free Money                                                   

Reality: Student loans must be repaid with interest. Many students underestimate the long-term impact of borrowing and the burden of repayment after graduation.

• Myth 3: Credit Cards Are Bad                                                                   

Reality: While misusing credit cards can lead to debt, responsible use can help build a positive credit history. Understanding how to use credit wisely is essential for future financial health.

• Myth 4: Budgeting Isn't Necessary                                                           

Reality: Budgeting is crucial for managing expenses and ensuring that funds last throughout the semester. It helps prevent overspending and encourages saving.

• Myth 5: Scholarships and Grants Are Only for Top Students                     

Reality: Scholarships and grants are available for a wide range of students with diverse backgrounds and achievements. Many are based on factors other than academic performance, such as financial need, community service, or specific talents.

• Myth 6: There's Plenty of Time to Start Saving for the Future                   

Reality: Starting to save early, even in small amounts, can lead to significant financial security in the future. Compound interest works best over a long period.

• Myth 7: Financial Advice Is Only for Those With Lots of Money               

Reality: Financial advice can benefit everyone, regardless of income level. College students can greatly benefit from learning how to manage their finances effectively.

• Myth 8: All Debt Is Bad                                                                             

Reality: Not all debt is bad. For example, student loans can be considered an investment in future earning potential. The key is to borrow wisely and manage debt responsibly.

• Myth 9: Working Part-Time Will Negatively Impact Academics                 

Reality: Many students successfully balance part-time work and academics. Working can provide valuable income and work experience, though managing time effectively is important.

• Myth 10: Parents Will Always Bail You Out                                               

Reality: While some parents can and do provide financial support, relying on this can hinder a student's ability to learn essential financial management skills and become financially independent. Equally, some parents are not able to provide financial support. 

By debunking these myths, as a new college student, you can approach your finances with a more informed and realistic perspective, setting the stage for better financial health during and after college.

 

 

Financial Wellness 

 

The first step to creating a healthy financial foundation is cultivating your money mindset. Most people don’t think about their money mindset leaving them vulnerable to mindless or overspending, not tracking their money, and not practicing saving or investing. These practices can lead to financial debt and stress.

 

Harnessing your Money Story 

 

From the moment we're born, we are shaped by the money messages we receive from our family, culture, society, and other influences such as race and gender. These positive or negative messages become deeply ingrained in our minds and subtly guide our financial decisions and behaviors every day.

Activity

Take a few moments to reflect on and answer the following questions. What is your money story? As a young adult, how are you showing up into adulthood in terms of money? What are your first money memories? What significant financial happenings occurred in your childhood such as divorce, job loss, or mental health? What did you realize about money in your community or your school? What fears do you have about money? What successes have you experienced with money? What role do you want money to play in your life going forward? What money beliefs do you need to challenge?

 

Building Your Financial Foundation

Understanding Your Financial Situation

 

Before we get into the numbers, going to college is a huge step emotionally and financially. Let’s first check in about why YOU are going to college. What does it mean to you to go to college? What beliefs do you have about college and what it will do for you? What financial beliefs do you have about college? There is no right or wrong answer but it is important to know your beliefs so you can control your financial narrative. Taking the time to understand your money beliefs about college will help you as you navigate through the next few years. 

 

Assessing Your Financial Health

 

Assessing your financial health is the first step in creating your financial picture and establishing a positive relationship with your money. You will want to gather and document all of your income sources. These could be from:

• Allowances
• Grants
• Scholarships
• Loans
• Full or part-time jobs 

These sources make up your income or the money that flows into your account. That’s the fun part! Next up is identifying your expenses. Expenses go out of your accounts on a monthly or quarterly basis. These can include:

• Rent
• Food
• Tuition
• Books
• Spending money

Tracking your income and expenses may feel like a daunting task but once you gather the information and record it on a spreadsheet or an app, it is easy to reference and update. Understanding your income and expenses is a step in creating a healthy relationship with your money. “Hi money, nice to meet you”.  This is one of the first things I do with my clients. 

 

Tools for Tracking

 

There are many tools available to track your money. I like to keep it simple and use an Excel spreadsheet. However, other apps and tools are equally handy.

 

Setting Financial Goals

 

Now that you understand your income and expenses, take a few minutes to think about setting short and long-term financial goals. By setting goals, you are intentional about how you spend your money. 

 

Short-term goals

Key things when setting financial goals are to identify things that are important in the short-term, meaning within 3 months to a year. This could be creating a budget, monthly budgeting (I like to call these money dates), setting spending limits, starting an emergency fund, building credit, seeking financial education, or saving for special trips or activities with friends. 

 

Long-term goals

 

Long-term goals (1 to 4 years) are important and can include graduating debt-free or with minimal debt, saving for post-graduation, developing a career plan, starting a car fund, searching for work for summer or post-graduation, building a strong credit history, and learning about or starting investing. 

 

You may have many goals, but the best way is to start with a few so you don’t become overwhelmed. You can then add more goals as time goes on.  There are many ways to stick to your savings goals. 

 

Budgeting Basics

 

Budgeting may be an emotionally loaded word but it is a crucial step in managing your financial health. Luckily, you are already on your way to creating a budget as you can utilize the financial data from the exercise above. 

 

The most valuable thing about a budget is that it tells you what to do with your money based on how much income you have. If you have ever heard the term, “live below your means” a budget tells you if you are doing so. 

 

When looking at expenses, I tell my clients to reflect on the life they truly want, and what is most important to them. This is called aligning your spending with your values. Your expenses should not reflect spending on things that aren’t important to you, cut those! This type of budgeting is called values-based budgeting and it provides you with a foundation of how to spend and save your money.

 

Become a financial strategist

 

Being in college is a great time to think about what truly brings you joy. Is it a coffee from Starbucks or saving that money for a new experience? For some, daily coffee is a staple. This makes coffee a fixed cost but could it become a variable cost if you don’t get it from Starbucks and make a slight tweak to enjoying that cuppa from your dorm or home instead?  With your expenses, are there ways to reduce them or replace them with less costly goods or activities? 

 

Budgeting Tools and Resources

 

There are many apps, online resources, or templates available to you. Let's start with a free one. Free apps are Good Budget or Every Dollar. You can also search the internet for free budget templates. I created a Magic Money New College Student Excel spreadsheet for new college students to help you get started. 

Tips for Sticking to a Budget

 

Know your why of keeping your monthly money dates and updating your budget. Remember, you are worth it, and creating a healthy relationship with money at a young age will ensure financial wellbeing now and in the future. I often compare it to brushing your teeth or wearing sunblock. It is a habit that once ingrained will pay off in perpetuity. A budget helps you to reduce present and future financial stress, anxiety, and pain. 

 

Set a monthly money date

 

A money date is a pre-planned time when you review your budget and make adjustments. Maybe you overspent in one area or underspent in another area. Check in about what is working and what is not. Find a time that works for you. I recommend my clients find a time free of HALTS - hungry, angry, lonely, tired, or stressed. Easy right? The most important thing is having the money date, and having it consistently. 

 

If you avoid budgeting or tend to impulse spend, you may benefit from additional support to break through psychological barriers. If you identify as someone who has ADHD and wants to understand your financial superpowers, or if you experience financial anxiety in California, you are not alone and there are resources to support you! If you need accountability, consider connecting with a friend or mentor to do it together.

 

 Managing Debt and Credit

 

 

Understanding Student Loans

 

If you have student loans, there are important things to be aware of including the type of loan you have. There are two types of loans, federal and private. They are likely to have different interest rates and repayment schedules. 

 

Federal student loans and private student loans have key differences that significantly impact college students and their financial wellbeing. Federal student loans are funded by the government and typically offer lower fixed interest rates, flexible repayment plans, and borrower protections such as deferment, forbearance, and income-driven repayment options. They also do not require a credit check or a co-signer, making them more accessible if you have a limited credit history. 

 

In contrast, private student loans are provided by banks, credit unions, and other private lenders, often requiring a credit check and sometimes a co-signer. They generally have higher and variable interest rates, less flexible repayment terms, and fewer borrower protections. While private loans can fill funding gaps when federal aid is insufficient, their higher costs and stricter terms can increase financial risk, potentially leading to greater financial strain after graduation. Therefore, you should consider exhausting federal loan options before considering private loans to ensure better financial stability and manageable debt levels.

Credit Cards

 

Pros

 

Credit cards, as a young adult, are a great way to start learning how to use credit cards responsibly and build credit. Establishing a credit history early can help you qualify for loans, mortgages, and better interest rates in the future, impacting major life decisions like buying a car or renting an apartment. Additionally, responsible credit card use can provide financial flexibility, allowing you to manage emergencies and everyday expenses with ease. Credit cards often come with rewards, cashback, and consumer protections such as fraud protection and extended warranties. Learning to manage credit cards wisely also teaches crucial financial skills, including budgeting, tracking expenses, and understanding interest rates. They tend to be offered bountifully at college. I remember getting a free t-shirt and a credit card that had the picture of my undergraduate college on it, Too cool! I was sold!

 

Cons

 

However, there are also notable risks associated with credit card use which I came to find out during college. Misuse can lead to high-interest debt, which can be challenging to pay off and cause long-term financial strain. Accumulating debt can also negatively affect your mental health due to increased stress. Moreover, carrying a balance on a credit card incurs interest charges, and late payments can result in additional fees and higher interest rates. Poor credit management, such as late payments and high credit utilization, can damage your credit score, making it difficult to secure loans, rent an apartment, or even obtain certain jobs in the future. The temptation to overspend on non-essential items is another risk, leading to unnecessary debt and financial instability. Balancing these pros and cons is crucial for maintaining financial wellbeing and laying the foundation for future financial success.

Debt Management Strategies

 

Whether you have a credit card or student loan debt, the best approach to paying off debt is to pay off the high-interest debt first, which will save you the most money in interest over time. If you find yourself with multiple sources of debt and you can no longer afford to service the payments, you will want to consider consolidation options and seek advice. 

 

 

 

Saving and Investing

 

Importance of Saving

 

Saving takes practice and the best way to start is to have a separate bank account that is solely dedicated to savings. Although it may seem difficult to save while your finances are limited in college, the practice of saving $20-$100 a month will help you build your savings. You can start a savings account at your bank or any local bank. The banks with the lowest fees tend to be credit unions or online banks. 

 

Saving for emergencies

 

One of the key reasons to save your money is in the event of an emergency, which is an unexpected expense. Having money set aside for emergencies reduces stress. 

 

Introduction to Investing

 

Investing as a college student can significantly benefit your financial future. Start by educating yourself on the basics through books. I like the book written by Harold Pollack, a University of Chicago Professor, and Helaine Olen, a journalist, The Index Card. There are also online courses and articles. Set clear financial goals, create a budget, and save a portion of your income regularly if possible. Understand various investment options such as stocks, bonds, mutual funds, ETFs, and consider low-risk options like savings accounts or CDs, index funds, or savings bonds. Open an investment account through a brokerage or robo-advisor, and if you have earned income, consider a Roth IRA. Begin with modest amounts and make consistent contributions to take advantage of compound interest and build wealth over time.

 

Save and Invest early and often to take advantage of compound interest. Compound interest allows your investments to generate earnings on both your initial principal and the accumulated interest, leading to exponential growth of your wealth over time.

Financial Aid and Scholarships

 

Maximizing Financial Aid

 

If you are a new college student you have likely heard or already applied for FAFSA otherwise known as The Free Application for Federal Student Aid. It is a form that college students in the United States can fill out annually to determine their eligibility for financial aid, including federal grants, work-study programs, and loans. The FAFSA collects information about a student's and their family's financial situation to assess their need for financial assistance. Submitting the FAFSA is crucial for accessing various types of financial aid, and states and colleges can also use it to award their own financial aid. It's important to submit the FAFSA as early as possible, as some aid is awarded on a first-come, first-served basis.

Grants, work-study, and loans

 

Understanding the different types of financial aid is crucial for new college students. Grants are need-based funds that do not need to be repaid, making them a valuable source of financial assistance. Work-study programs provide part-time employment opportunities for students to earn money while attending school, helping to offset educational expenses. Loans, on the other hand, must be repaid with interest and can be either federal or private. Federal loans often offer lower interest rates and more flexible repayment options compared to private loans. Being aware of these options allows students to make informed decisions about financing their education.

 

Finding Scholarships

 

Finding scholarships in California involves researching a variety of sources to maximize opportunities for financial aid. Start by exploring the California Student Aid Commission's website, which offers state-specific scholarship and grant information. Additionally, utilize online scholarship search engines like Fastweb and Scholarships.com to find scholarships tailored to your academic interests, background, and extracurricular activities. Check with your high school counselor or college's financial aid office for local scholarships and those offered by community organizations, businesses, and foundations. Applying to as many relevant scholarships as possible increases your chances of securing funding for your education.

 

Tips for writing effective scholarship applications

 

Writing effective scholarship applications involves presenting yourself clearly and compellingly to stand out among other applicants. Start by carefully reading the application instructions and criteria to ensure you meet all requirements. Tailor each application to the specific scholarship, highlighting relevant achievements, experiences, and goals. Craft a compelling personal statement that showcases your unique story, strengths, and aspirations. Proofread your application multiple times to avoid any grammatical or spelling errors, and consider seeking feedback from teachers, mentors, or peers. Finally, submit your application before the deadline and keep a copy for your records.

Employment and Income Opportunities

 

On-Campus Jobs

 

One of the easiest ways to earn income is finding a job on campus. Jobs tend to be flexible in time requirements allowing you to balance work and study. You can look for on-campus jobs at:

 

• The Campus Career Center
• University Job Portals
• Campus Department and Offices
• Dining Services and Retail
• Work-Study Programs
• Research Positions
• Student Employment Offices
• Online Job Boards

Part-Time Jobs and Internships

 

If you have more transport options, finding job opportunities related to your field can enhance your resume as well as help you gain experience. 

 

Entrepreneurial Ventures

 

Starting a small business or side hustle is another way to balance entrepreneurship with academics. Here are some ideas:

• Freelancing: Offer services such as graphic design, web development, writing, or social media management on platforms like Upwork, Fiverr, or Freelancer. 

• Tutoring: Provide academic tutoring in subjects you excel in, either independently or through platforms like Tutor.com or Chegg Tutors. 

• E-commerce: Start an online store selling handmade items, vintage finds, or dropshipping products through platforms like Etsy, eBay, or Shopify. 

• Content Creation: Create and monetize content on YouTube, Instagram, TikTok, or a personal blog, focusing on a niche area of interest. 

• Event Planning: Organize and manage events such as parties, weddings, or campus activities. Offer your services to peers or local clients. 

• App Development: If you have coding skills, develop and sell apps or software solutions, either independently or on app marketplaces like Google Play and the Apple App Store. 

• Photography/Videography: Offer photography or videography services for events, portraits, or businesses, and sell stock photos or videos online. 

• Fitness Training: If you're passionate about fitness, become a certified personal trainer and offer training sessions or create and sell workout plans online. 

• Handyman Services: Offer services like moving help, furniture assembly, or minor repairs through platforms like TaskRabbit or Thumbtack. 

• Landscaping: Offer yard maintenance services such as weeding, lawn mowing, or planting through GreenPal, LawnStarter, or Nextdoor. 

• Custom Clothing/Accessories: Design and sell custom clothing or accessories, either through a local market or an online platform. 

• Ride-sharing/Delivery: Work with companies like Uber, Lyft, DoorDash, or Instacart to provide ride-sharing or delivery services. 

• Pet Sitting/Dog Walking: Offer pet care services through platforms like Rover or independently within your community. 

These entrepreneurial jobs allow you to earn income while developing valuable skills and potentially building a business that could continue to grow after graduation.

Prioritizing Financial Self-Care

 

Stress Management

 

Attending classes, studying, writing papers, and taking classes may cause not only psychological stress but financial stress as well. It is important to recognize the financial stressors of managing money, working and studying, tuition expenses, books and supplies, and living expenses. 

 

Strategies for managing financial anxiety

 

This guide has outlined ways to manage your financial anxiety through prioritizing financial health. There is also a self-care component of being intentional and mindful as you navigate financial stressors. 

 

Practicing Mindfulness for Financial Wellbeing

 

No financial journey is free of stress or anxiety. It is important to make room for those uncomfortable feelings, emotions, or experiences, accept them as they come along, and continue to work towards our goals and live by our values. Here are some meditations and practices to support you along your journey. 

 

• Mindful Money: Practicing Loving Kindness
• Mindful Money: Practicing Forgiveness
• Mindful Money: Practicing Receiving and Giving Well Wishes
• Dropping Anchor and other ACT resources by Russ Harris

 

There is also a resource I recommend on practical ways to Practice Self-Love. I also often refer clients to the free app, InsightTimer, which offers hundreds of uploaded content and resources for wellbeing.  

 

Seeking Help and Advice

 

The best thing about college is the resources available to you. For example, when I was in grad school, a tow company, when jump starting my car, fried my fuel line. It was $1,000 to fix. Being a college student, I did not have the money so I sought options at the legal center. They said, “Well, it looks like going to small claims court will be part of your graduate experience”. They truly helped prepare me to navigate the behavior and influence of big business to win my small case! Equally, you can get tailored support by seeking help. See below for resources to look for at your college.

 

On-Campus Resources 

 

• Financial Aid Office: Provides information on scholarships, grants, loans, and work-study opportunities.
• Student Affairs or Student Services Office: Offers workshops and seminars on budgeting, credit management, and financial planning.
• Counseling and Psychological Services: May include financial counseling as part of their services or refer students to appropriate resources.
• Career Services: Assists with job placement, internships, and career counseling, which can help improve financial stability.
• Peer Financial Counseling Programs: Trained students provide financial advice and education to their peers.

 

Online Resources

 

• Financial Literacy Programs: Many colleges offer online courses or modules on financial literacy topics like budgeting, saving, investing, and debt management.
• Budgeting Tools and Apps: Universities often provide access to budgeting tools and apps to help students manage their finances effectively.

 

External Resources

 

• Community Resources: Local community organizations or non-profits may offer financial counseling and educational workshops.
• Government Programs: Federal and state programs can provide financial aid, grants, and loans to eligible students.
• Bank and Credit Union Services: Many banks and credit unions offer student-specific accounts with financial education resources and benefits like no-fee accounts and lower interest rates on loans.

 

Educational Workshops and Seminars

 

• Money Management Workshops Sessions on budgeting, saving, credit management, and debt reduction.
• Tax Preparation Assistance: Some campuses offer free tax preparation assistance for students.
• Financial Wellness Days/Events: Colleges may host events focused on financial wellness, featuring guest speakers, workshops, and informational booths.

 

Counseling and Advising

 

• One-on-One Financial Counseling: Personalized sessions with a financial advisor to discuss individual financial situations and goals.
• Academic Advising: Advisors can help students understand how their academic decisions impact their financial situation.

 

These services aim to equip you with the knowledge and skills needed to manage your finances effectively and make informed financial decisions.

 

Going forward financially

 

In conclusion, as you embark on your college journey, it's essential to lay a strong financial foundation that will support both your academic and personal goals. By debunking common financial myths, understanding your financial situation, setting achievable goals, and utilizing available resources, you can take control of your financial future. Remember, cultivating a healthy money mindset and practicing financial self-care is just as important as managing your budget and debt. You have the tools and support to navigate this journey successfully—so start today. Take proactive steps, seek advice when needed, and stay committed to your financial wellbeing. Your efforts now will pave the way for a financially secure and prosperous future.