Smart Spending and Saving for College Students

By Ocean Gildee, University of North Carolina Wilmington

Being a college student used to mean eating three packs of ramen noodles a day and biking around campus because gassing up your 1985 Chevy was too expensive. Whether you work a part-time job or get an allowance from your parents, you can learn some key concepts to saving and spending wisely -- now and after college.

Smart Spending
There are plenty of ways to save a few bucks every day. Dr. Dick Verrone, personal-finance professor for the Cameron School of Business at the University of North Carolina, Wilmington, has these penny-pinching tips:

• Order water. Don’t get soft drinks when you’re eating out. Why pay $2 for 150 soda calories? Also, Verrone says, “Never order orange juice.” OJ is extremely overpriced at restaurants, and most of the time it’s from concentrate.
  

• Limit your pocket cash. When going out on the town, take a 20-spot, and leave your cards at home. You’ll be forced to keep your tab under $20.

• Buy quality clothing items. They may be a little more expensive, but they’ll last longer. Verrone also definitely approves of outlet shopping. But before making purchases, think: Do I need this? If not, don’t buy it!

• Switch your prescriptions. Change your name-brand medications to generic ones. You can usually save about $20 per med this way.

Clipping “Coups”
OK, most college students don’t have easy access to a daily paper or coupon flyer, so how do you save with coupons and special discounts?

• Look online. If you’re going to the sporting-goods store, for example, type the name of the store into the search engine, along with the words coupon codes. Lots of websites track down discount codes for online shopping, as well as printable coupons for buying items in-store.
• Sign up for discount alerts via text. Some campuses have local text-message discount services -- check at your student center or information desk. (Of course, this is not a good idea if you don’t have an unlimited cell-phone plan.) Mike Meyer, a UNCW senior, is signed up for deals in North Carolina at CouponstoYourPhone.com. “Every Monday, I get a coupon-text for one of my favorite restaurants,” he says. “It’s awesome.”
• Purchase a coupon book. These books pack hundreds of coupons, usually for buy-one-get-one-free offers. They’re worth the $25 (if you buy one from a campus organization’s fund-raiser) or even $35 (available online at Entertainment.com) after just a few uses.

Long-term Saving
Verrone recommends getting into the habit of saving now to set yourself up for an easier financial situation after graduation. “Make the amount small enough so you can do it,” he says, such as saving $5 per week or $10 each month.

• Set up an automatic transfer. Most large banking institutions, such as Bank of America or Wachovia, will let you set up transfers between linked checking and savings accounts. Meyer has $30 a month transferred. “That’s how I saved money for spring break freshman year,” he says.
• Start an individual retirement account. No, you’re not too young! This is the time to do it. “Once you’ve accumulated $200 to $300, open a Roth IRA and continue to fund it every month from your savings,” advises Verrone. Even if you continue to only save that $10 per month, you’ll be accumulating real money for the future.
• Watch your money grow. Let your savings work for you by investing in mutual funds with low expenses and superior performance records, suggests Verrone. Consult a financial adviser at your bank for more information.
• Consider an online banking service. Having an online bank can be a good outlet for putting away large sums of money that you can still access without penalties (unlike with an IRA). Online banks usually provide higher interest rates, although transfers take two to three business days. Meyer has a savings account with INGDirect and loves it: “A two-day transfer is more of a commitment, so I have to really think about it before I make that decision.”