Heading off to college? Here are some tips for managing your finances

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NEW YORK (AP) — Heading off to college is exciting, but it also involves new adult responsibilities. That makes it a great time to start getting comfortable with credit, building healthy spending habits and learning how to manage money.

It’s important for all students to build a solid foundation in managing their finances, said Sara Wilson, director of product innovation at Student Connections, an organization that helps students overcome financial barriers.

“You have to consider the financial decisions you make in college because they impact what your financial security is going to be once you enter your first job,” Wilson said.

If you’re starting college this fall or you’re currently a student, here are some expert recommendations:

College is the perfect time to start building your credit score, said Courtney Alev, consumer financial advocate at Credit Karma. A credit score is a mathematical formula that helps lenders determine how likely you are to pay back a loan. Credit scores are based on your credit history and range from 300 to 850. A low credit score makes it more complicated or more expensive to obtain car loans, mortgages, credit cards, auto insurance, and other financial services.

“College is an ideal time to start building a credit report, because the earlier you start, the more time you have for that credit to build and then work in your favor when you eventually need it, whether it’s for a loan or an apartment,” Alev said.

Alev recommends starting your credit card journey with secured credit cards. These credit cards are opened with a one-time deposit that serves as collateral. This first deposit is usually returned when the user closes the account with zero balance or when they move to an unsecured credit card with the same bank. Another starting option is student credit cards, which are easier to qualify for and tend to come with lower credit limits.

Regardless of the type of credit card you open, the No. 1 goal is to only spend what you can afford to pay off each month, Alev said.

During college, you might have multiple sources of income, whether from a part-time job, a financial aid stipend or family support. Having multiple or irregular streams of income might make it difficult to manage your finances, but budgeting is still a crucial step toward achieving financial stability.

You can budget by using an app, creating a spreadsheet or simply writing your expenses down on paper. No matter the format, it’s important for your budget to include your earnings and spending each month. Having a specific financial goal in mind can help you stay motivated to budget.

“Budgeting is simply creating a plan to get what you want with your money,” Wilson said. “Figuring out what you want, then the plan that you need to follow to get there.”

To help juggle multiple sources of income, students should divide their monthly bills by four so they have a target for the amount they need to set aside each week, said Lindsay Bryan-Podvin, financial therapist and founder of Mind Money Balance, a financial wellness service.

For example, if rent is due on the first of the month and it’s $1,000, that means you need to save $250 each week. Dividing your bills can help you manage your money when your income is inconsistent throughout the semester.

While it might be difficult to earn extra income while you're in college, creating an emergency fund can save you a headache down the road. Many students can get excited about the idea of investing, but before diving fully into it, Alev recommends that you have a savings cushion.

“The power of that compounding interest and the growth of the economy can really pay off over time, and it’s so important, but an emergency fund is going to serve your immediate needs,” Alev said. She suggests that you aim to have enough savings to cover rent and other essentials for a few months before starting to invest.

One of the most exciting aspects of college is the new friends you meet. As you’re building new friendships, Bryan-Podvin recommends that you practice open communication about your financial journey.

“It can feel really hard to say ‘I can’t afford that or that’s not a priority for me,’" Bryan-Podvin said.

Being transparent about your finances can help you avoid feeling pressured to spend above your means.

Bryan-Podvin recommends that you clarify your spending priorities to make it easier to avoid overspending. For example, if you pay for a gym membership because it makes you feel better, keep this expense in mind when you have to say no to ordering takeout with your roommates.

While paying back student loans begins after graduation, it’s crucial that you have a plan while you’re still in college. Having a plan includes knowing how much you’re borrowing each semester, what your expected total repayment amount is and how much your monthly payments will be once you graduate.

“As long as you understand what you’re getting into and you’re making a plan for how to navigate and manage it, you’re an informed consumer of that debt,” Wilson said.

How much you borrow in student loans will affect your financial life after graduation, so it’s crucial that you don’t put off understanding the cost of the loans.

Universities typically have a number of resources, so it’s best to take advantage of them while you’re in school, said Phil Schuman, executive director at the Higher Education Financial Wellness Alliance.

“The nice thing about the system that you have on your campus is the people aren’t going to judge you,” Schuman said. “Their job is to help you figure out what the solution is to your question, and they’re going to point you in the right direction.”

Whether your question is about financial aid or budgeting, making sure you’re tapping into the free resources on campus can help smooth your financial journey. You can typically find resources at your school's library, student life office or recreation center.

Mistakes happen to everyone, not only students. But what is important is that you know how to cope when you make a mistake, Schuman said.

Managing your finances is a learning process that will continue well beyond your college years. But starting your journey in college can help you kickstart that learning process.

“Mistakes will happen,” Schuman said. “Give yourself grace. Nobody is perfect when it comes to their finances, so don’t feel like you have to be as well. Talk to somebody, acknowledge it, and then figure out what you can do moving forward to right the wrong next time.”

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The Associated Press receives support from Charles Schwab Foundation for educational and explanatory reporting to improve financial literacy. The independent foundation is separate from Charles Schwab and Co. Inc. The AP is solely responsible for its journalism.