Do not save what is left after spending, but spend what is left after saving. —Warren Buffet, investor and philanthropist

Tracking Personal Spending Habits

Lots of students work hard and manage to cover the cost of attending college, but plenty find that they don’t have a lot left over for other important things, like housing and food. The idea of actually saving money—for things like clothes, entertainment, or other “extras”—may seem completely out of reach. In this section we challenge you to take a chance and try. You may be surprised to find that you can change your spending habits, gain better control over your finances, and wind up with money in the bank. Below are some common hazards you can avoid and tips to get you started:

• New spending responsibilities: If you’re starting college right out of high school, this may be the first time you’ve had your own checking account or received regular income from a job. It may be tempting to spend what’s left over after you pay for big items like tuition and books, forgetting that you still have other expenses. Even if you don’t spend a lot of money on extras, you may not be aware of strategies for saving money, such keeping an eye out for coupons and sales.
• Using credit cards: Young college students are often targeted by credit card companies because they have comparatively few financial responsibilities and generally have clean credit records. Owning and using a credit card can be an effective way to build a credit history, and it can also be useful in an emergency, but credit cards do carry significant risk: If you don’t pay them off in full every month, they accrue interest—sometimes at a very high rate—and the total amount you owe can become an enormous financial burden.
• Neglecting to pursue scholarships: Many college students are either unaware of scholarships they qualify for or they just don’t follow through and apply. Take advantage of the financial aid office at your college. Ask questions and get help finding out what’s available to you. You may be passing up an opportunity to get “free money” for tuition, room and board, and books.
• Recreational activities: Unlike high school students, college students don’t generally have classes all day, so they may find themselves with hours of free time. To fill that time, they may want to go to places like restaurants, movies, and shopping centers. These activities add up fast and cost more money than eating on campus with a room-and-board plan or cooking meals and socializing at home.^[1]

Most of these points have budgeting skills in common. Budgeting involves knowing how much money you have and where it’s going. The following activity will help you figure that out.

Saving Strategies

Whether you are starting college as a single eighteen-year-old or you are older, working, and raising a family, there’s a set of basic financial strategies that can help you lower your expenses and save money while you’re in school. Analyzing your spending habits (as you just did) is the first step. Next, you can try the following:

• Create a detailed budget: Budgets will enable you to treat yourself while avoiding overspending. For example, you might allot $50 a month for going out with friends. If you’ve already spent $50, you should find alternative recreational activities for the rest of the month so you don’t have to borrow money that you set aside for other expenses.
• Cut down on meal costs: Looking for deals and using coupons at grocery stores will save more money than eating out. Students living in dorms may not have a lot of space and supplies for cooking, but they may still have room for a refrigerator and coffeemaker to avoid overspending on snacks and trips to Starbuck’s.
• Save on transportation: Cut down on the cost of gas (or get rid of your car altogether) by walking to class, riding a bike, or using public transportation. Check to see whether your college offers free or reduced-price student bus/train passes.
• Look for discounts and used items: As long as a textbook isn’t outdated, you can often purchase used or discounted copies online or from other students. Need to furnish a dorm room or off-campus apartment? You’ll save a lot money by borrowing household goods from friends and family or by purchasing them from secondhand stores.
• Apply for scholarships and minimize loans: To repeat, scholarships don’t have to be repaid, and they don’t rack up interest. Do your best to apply for everything and anything that you qualify for, scholarships-wise. Winning a scholarship can have a big impact on your budget and financial health.

Given the money-saving strategies just described, let’s return to the personal spending you tracked earlier and see where you might be able to save.