By: Janet Diaz, Bank of America, Chicago

Back to school season means lots of “firsts,” particularly for students heading off to college for the first time. Whether they plan to live on campus or commute from home, college can be a defining time for students, often representing a young person’s first taste of financial independence. The college years are a great time for students to learn healthy financial habits that can set them up for a lifetime of success. As students across Chicago pack their belongings and head off to college, here’s what they need to know to make sound financial decisions today, tomorrow and for years to come.

Create a Budget
Some students may be working to support themselves in college, while others may get an allowance from their families. Either way, it’s up to them to manage their day-to-day finances and make good financial choices. This starts with a sound, practical budget.
Budgets don’t have to be complicated, especially at the beginning. Start with two to three categories – ideas include food, entertainment and seasonal spending – and allocate five minutes per day to track spending. Then, before making any purchases, consider whether the purchase falls into the “want” or “need” category. Reflecting on and documenting spending can help college students make smarter financial decisions.

Build Credit
Establishing good personal credit is critical to achieving many financial goals throughout a person’s life. For that reason, college-bound students should not be discouraged from utilizing credit cards. However, first-time credit card users should understand how to make credit cards work for them and their financial situation.
The best credit card for first-time cardholders is one with a low credit limit, which can help users boost their credit scores. Students should charge a small number of items each billing cycle, ensuring they have the funds to pay the credit card in full each month. Avoid spending more than the credit limit, which could result in fees and hurt the user’s credit score. Most importantly, be sure to set billing reminders so credit card bills can be paid on time.

Manage Bills
One of the most important financial exercises in which all college students should participate is managing and paying bills. Whether a student is at home or on campus, this is the time in their lives when they should begin taking on additional responsibility for their bills. Students should pay, at minimum, one bill each month and have full accountability for making sure it is paid on time and in full.
With so many competing priorities – classes, sports, extracurricular activities – it’s important to make sure monthly bills don’t fall through the cracks. This can be achieved by making a list of all monthly bills, setting them aside in a specific space (or email folder) so they don’t get lost, setting calendar reminders for each of the due dates, and allocating a particular day and time of the week to review statements and pay bills.

Set Savings Goals
Even the savviest students need an incentive to establish healthy financial habits. College students are more likely to stay on track with their budgets and bills when they are working toward a meaningful goal and can celebrate their accomplishments.
At the start of each school year, students should be encouraged to set a savings goal for the year. A portion of the annual savings may be allocated toward a future goal – maybe it’s buying a car or taking a trip with friends – and a portion of it placed into a savings account to earn interest. Once the goal has been established, students should review it monthly and evaluate progress. When savings is short, students can explore picking up additional shifts at work or reduce spending.

Heading off to college marks an exciting time and making sound financial decisions can have a significant impact on a student’s college experience. While, initially, adhering to a budget may sound restricting, there is tremendous freedom that comes with smart money management. Students who learn how to spend and save will always have the skills to budget for what they want without sacrificing what they need. Most importantly, the financial habits young adults establish during college can truly set them up for a lifetime of success, empowering them to buy a car, purchase a home, raise a family or navigate whatever road they travel in the years ahead.

For more financial advice for every stage of life, visit https://bettermoneyhabits.bankofamerica.com

Diaz oversees several Bank of America financial centers in Chicago where she drives local strategies to enhance the client experience, client relationships, operational excellence and community engagement.