Money management skills to master before college

Budget, savings, overdraft, deposit — you may hear some of these terms as you get closer to college. They can be overwhelming and might involve a bunch of confusing numbers. But these four lessons from personal finance experts can give you a running start to manage your money the smart way. 

Lesson 1: Open a bank account

Opening a bank account is “an absolute must,” says Denise Winston, a personal finance expert who runs workshops for teens. “You will have a bank account for the remainder of your adult life,” she says. So, “figuring out how that bank account works is crucial.”

When you open the bank account, “use technology to help you communicate and stay on track,” says Winston. You can set up email or text alerts for when bills are due, when your account balance is low, or when a withdrawal comes from your account. 

Don’t be afraid to ask questions. Talk to people at your bank and ask your parents questions. To “avoid serious boo-boos,” it’s best to not try to do it all on your own, Winston says. 

Lesson 2: Find your “money personality”

Everyone has certain tendencies when it comes to money. You may save more than you spend. You may shop more when you’re stressed or bored. You may want to always have the latest technology or eat out.

Mary Johnson, Director of Financial Literacy at Higher One, says “You have to be able to understand your money personality in order to keep yourself on track.” She recommends understanding your spending triggers. For instance, if a fight with your friends sends you to the mall ready to shop, you can change that behavior to keep from regularly overspending. By paying attention to when and where you spend your money, you can start to figure out your “money personality.”

Lesson 3: Know how much stuff costs

With the help of your parents or other adults, go out and see how much it would cost to live on your own right now. Ask around to see how much people spend on food, rent, Internet, and other expenses. Then, work backwards to figure out much you need to earn in order to pay for everything. 

You can also ask to take on a little more responsibility. Winston believes everyone should have “some kind of experience to manage a certain amount of money” before college. Pay your own cell phone bill or make another regular payment. This is good practice for paying bills on time and ensuring you have enough money to make payments without putting your account into overdraft, which means you pulled out more money than you had in your account. 

Lesson 4: Create a saving strategy

The first part of your saving strategy could be identifying a goal. Your goal could be having $500 set aside for emergencies like car trouble or airfare to get home quickly from college. You could also set a goal for a new computer or textbooks. 

The second part is deciding how much to put into savings. You could decide on a set number like $10 or $20 a month. That can be the most simple method. But Elle Kaplan, CEO and Founding Partner of LexION Capital Management LLC, suggests a 50-30-20 budget. “50 percent of each paycheck goes to necessary expenses, 30 percent is fun funds, and 20 percent goes to saving.” With this sort of savings plan, you can set yourself up with habits you need to manage your money well for a lifetime. 

“Money equals control,” Winston insists. “Whoever controls the money controls you.” By following these four lessons, you’ll be able to start controlling your own money so you can control your life.