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Across My Desk: Managing Personal Finance In College

To that end, here's some solid information I received last week from the American Institute of CPAs press release:

  • The average outstanding balance on undergraduate credit cards was $2,169 in 2005, according to student-loan provider Nellie Mae.

  • Fifty-six percent of undergraduates get their first card at age 18 and 91% of students have at least one credit card by their final year, Nellie Mae reported. By graduation, 56% of students carry four or more cards.

    California CPAs suggest that college students begin by sitting down with their parents to discuss monetary issues openly and consider the following tips in managing personal finances while in college:

    Tip 1: HAVE A PLAN

    To avoid misunderstandings with your parents, be up front about which college expenses they will cover and which they expect you to pay. Once you're in agreement, have them set up a plan for disbursing those funds.

    Monthly payments typically work best.


    By developing a budget you can maintain control of your money and limit spending. Get started by listing all sources of income-job earnings, savings, and parental support- and then develop a list of what you think you might spend in each category for a month.

    For starters, think about the cost of books and school supplies, meals not covered by a meal plan, entertainment, personal care items, laundry, telephone and Internet service, cab rides or car expenses, and clothes. Remember, budgets need to be flexible and can be revised after the first month or two.


    With credit card companies aggressively targeting college students, credit cards can be a major pitfall. Having a credit card for emergencies and for building a credit history is not necessarily a bad idea. If you decide to get a credit card, be sure you understand how credit works.

    You should never charge more than the amount you can comfortably afford to pay each month. Want to be on the safe side? Use a debit card for everyday expenses and reserve the credit card for true emergencies. Debit cards give you all the convenience you need but are limited to the amount of money in your bank account.


    A checking account can provide convenience and teach important savings and budgeting skills. It's usually a good idea to open a checking account in the area where your school is located. Locate a bank that offers free or low-fee checking for students and has several convenient ATM locations. This reduces out-of-network ATM fees.

    Learn how to balance a checkbook. It's a tedious job, but it's cheaper than bouncing checks. Remember, out-of-state check deposits take a few days to clear.


    Keep your spending under control by looking for low-cost entertainment on campus.

    Learn to comparison shop and economize. Clipping coupons, purchasing used textbooks, sharing cab rides, buying generic brands, and renting videos instead of going to the movies are just some of the ways you can save money.


    Check out the California Society of CPAs' free website on personal finance topics. This Web site can be accessed at: www.calcpa.org/dollars -- Review the "Dollar & Sense Program."

    The American Institute of Certified Public Accountants created this content for the 360 Degrees of Financial Literacy Public Service Campaign for the CPA profession which CalCPA is a member.

    To read more articles, please visit the column archive.

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