What you do in college can affect you for the rest of your life — the professors you encounter can affect your career, the connections you make with alumni from your college can even help you get your first job. 

And other, sometimes less obvious factors affect you, too. When you’re in college, you start to develop lifelong money habits. 

Why College is an Important Time to Develop Money Habits

Now, you may have paused a second because most of the time, you don’t have any money during college. How can college be an important time to develop money habits? 

Think about it, though. Your parents aren’t around anymore. You get to decide whether to throw a pizza-and-beer bash or save your money for books next semester. You can save money for studying abroad or blow it on a full stereo system. 

Here’s why college paves the way toward your financial future:

1: You figure out if you’re a saver or a spender.

Now, it’s true that you might not be exclusively one or the other. However, it’s a great way to start thinking about the difference between one or the other. 

Most people have financial personalities, just like you veer toward being outgoing or reserved — it's just part of your nature.

Believe it or not, exclusively being a saver or spender could lead to problems. Which one are you? 

• Saver: You’ve got a great start to managing your personal finances — but do you squirrel money away (like under your pillow)? If you do that forever, you may become a victim of inflation.
• Spender: You like to live a more lavish lifestyle. Fun, right? Well… your financial personality ties directly to your financial situation, so spenders have to learn to exercise some self-control.
• Somewhere in between: Do you have a tendency to spend, spend, spend, then reign it in a little bit? Being a little haphazard can spell trouble later, especially if you’re not sure what you should be doing at any given time.

2: You internalize what it feels like to be poor.

So, this feels like a weird reason, right? However, it can help you because you may decide that you can live on less for a long time. College forces you to realize that you can get by on less — fewer name brand clothes, fewer nights out and more. 

However, it can also help you realize you don’t want to live that way forever and can build your resolve to get a great job after college. Being poor during college is a mindset thing, and if you can carry that mindset for as long as you can, you’ll save more.



3: You’re in training for how to live on your own.

You may not be fully living on your own, but college trains you how to pay a few bills, maybe balance your checkbook, pay your cellphone bill — all of those little things are great training for later in life. 

You’re going to have to pay for electricity eventually — why not get a little training while you’re still somewhat under your parents’ care? You may already be on their health insurance. If you’re getting car insurance and dental insurance from them, too, you’re kind of like an adult on training wheels. 

One step at a time!

Habits You Can Develop During College

Here’s what you can do to develop great money habits that last a lifetime.

Habit 1: Get in a savings mindframe.

One of the keys to saving a successful amount for big things (such as a first house or car) is to pay yourself first. Whenever you make some money, tuck some of it away. Systematize this using automatic investing once you graduate — save first, then pay your main bills after you save.

When you get out of college and earn more, you can automate savings so you put aside money automatically out of your paycheck. It might be tough to use automatic investing during college (where will that extra money come from?) but getting in the habit of even tucking a few dollars away is in a savings account is a good thing.

Habit 2: Learn about investing. 

Continue to learn about investing throughout your life. We won’t cover the benefits of investing in stocks, bonds or your cousin Sam’s emu farm in depth here. However, know that investing is different than saving. 

Here’s a snapshot of how investing works: Every time you have a few dollars left over, put them toward your future. However, it’s important not to stuff them under your pillow. You invest them to combat the effects of inflation, which outpaces the interest rate you’ll get from a ho-hum savings account. 

Habit 3: Avoid lifestyle creep. 

It’s likely that you won’t experience lifestyle creep during college, but you’ve probably already heard of this term. It simply means the more you make, the more you spend. You’ll probably earn more in your 30s than you did in your 20s, and it’s best to live your same frugal way you did in your 20s into your 30s. 

You don’t have to worry about this now, but invest the extra money you’re making from your raises rather than increase your spending. Skip Kobe beef and Almas caviar, get yourself a crockpot, look into college dorm hacks and avoid the unnecessaries. 



Habit 4: Get in the habit of talking about money.

Sounds weird, right? This step is important, though! Your grandpa might be a champion stock market investor, and you could learn a thing or two. Talk to people who invest regularly. Ask them about their overall strategies, what you stand to learn and what you can accomplish if you invest like them. If they’re open to it, ask them how they built their portfolio and ask them how you can get there yourself.

Get a mentor early (get a sense of whether that person is a good money mentor first!) and learn all you can at an early age.

Habit 5: Make some (small) mistakes.

Yeah, really! It’s okay to make some small mistakes now — as long as they’re not big credit card mistakes, like racking up $10,000 on your Mastercard.

However, it’s okay to forget to pay your water bill once or write a check over the amount that’s in your checking account — just so you realize you don’t want to do that ever again! You’re young and bound slip a time or two.

As long as it’s not recurring, be okay with mishandling some small things.

Habit 6: Start out responsible with credit. 

Credit is one of those mistakes you don’t want to compound when you’re young because going crazy with the plastic could mean years of paying off debt with high interest rates (on top of your student loans). It could also result in: 

• Destroyed credit score
• Denied loan approvals for a new car, mortgage or future small business
• Sky-high interest rates for these types of borrowing opportunities

It can take years of responsible spending to fully recover from a damaged credit score or the limitations that massive amounts of debt put on your personal budget.

Develop Those Habits Early

Developing great money habits now will set the stage for the rest of your life. You’ve only got one life — live it well in the best way you can! (That includes in terms of money as well!)

Melissa Brock

Contributor

Melissa Brock is the founder of College Money Tips and is also the Money editor at Benzinga. She spent 12 years working in college admission, then turned to freelancing and editing. Nothing invigorates her more than writing about college and money and helping families navigate the college search process.