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Tips for Saving Money as a Broke College Student: How to Get on the Right Track

Updated on June 19, 2013

The Poor College Kid

The cliché is an accurate one. Students struggling to survive in college often find themselves struggling with money as well. We attend college so that we may get a better job and secure financial security for ourselves. The problem is that the years immediately following our college years tend to be the ones that require large expenditures. Since we were not able to put away any money while going to school, we are forced to accept large amounts of debt as an inevitable reality when we graduate and enter the real world. We set ourselves up for years of repayments to all kinds of lenders.

But there may be hope. Personal experience and observations of others have taught me that this does not have to be the case, at least not to the point we often allow it to get to.

I would like to offer a few recommendations to someone either entering, or even well into their college years. I know that there are many out there who are in the same situation I was in not too long ago. I want to give my story and provide a bit of insight as to what I think it takes to set yourself up for success upon graduating college. I am by no means a wealthy person, but the choices I have made give me confidence and hope for the future. I feel I am on the right track.

That is my hope for you.

My Story

I spent my first couple of college years at a two year institution that was far less expensive than the state university that was also in my hometown. I worked at a couple of different retail outlets at different times making less than $8.00 an hour at both. I was very fortunate during this time, but also not quite as financially intelligent as I wish I would have been. I was generously given an older car by my aunt and so had no car payment. I lived, and currently live at home, so there wasn't and isn't any rent. I have an uncle who is quite good with financial matters. He guided me in opening a Roth IRA and an investment account to help pay off future debts like school. I could do this because I had extra disposable income with my retail job. After gas, insurance, fast food, and other unnecessary expenditures, I was able to invest about $165 a month in these accounts combined. This was during the financial crises so I actually ended up losing money. Still, I had around $1500 in each account after about two years. I felt I was doing well. I was a 19 year old kid with investment accounts, little expenses, and extra cash in my pocket.


My lack of financial smarts was clearly evident. By this time I had let a very cool looking, handy, shiny "Student Visa Card" handle lots of little transactions I said I would pay off at the end of the month. After around the same two years I mentioned above, I had accrued a balance of around $4500 in credit card debt (they were kind enough to let me continuously raise my limit). I was making minimum payments that eventually crept their way up to 29%. I chose not to pay for any college with extra cash, but rather took out large school loans. I took the maximum amount they would give me because I thought it would be cool to have that extra $1000 or so. I still have lots of student loan debts.

So what did I do? I made matters worse.

I chose to go to an expensive out of state university, cashing out the $1500 investment account to help with the move and things living expenses of being on my own. My tuition cost tripled that semester. I lived in a costly dorm room, bought a relatively expensive car that wouldn't break down (it ended up breaking down more than the old one), all the while keeping a low paying retail job with a different store of the same company.

Eventually, my debt spun out of control and I was starting to really struggle paying for living expenses, the car, books, etc. The choices I made following this period are what I now offer to you as suggestions for your own financial confidence.

1. Live at Home if Possible

I chose to go off to a college a couple states from my own because like so many, I wanted to get away from the place I had been around for my first 20 years. I wanted to fend for myself. I wanted to live free! Now, while I do think it is a good idea for someone of this age to experience the world from a new perspective, I think it can be done much cheaper that the way I did it. I could have spent a summer on my own somewhere. Paying for a high cost education isn't the smartest way to go about obtaining this freedom.

I chose to move back home and finish my education at the state university in my hometown. Not only did I cut loan cost dramatically, I significantly reduced everyday expenditures as well. Gas prices were less, food costs were less (thanks Mom), and I was able to start paying on my credit card debt. I understand that many in this situation cannot live at home for various reasons. To that person I suggest doing whatever you can to live as far below your means as possible. If you have enough in your budget to pay $400 a month for an apartment, don't. Look for a smaller place and pay $300 month. Do not let pride keep you from doing things like this. If you do, I would assume you really do not seek financial independence.

2. Spend like crazy.... on reducing debt.

I chose not only to increase debt with an expensive car and a high interest credit card, but to also put money that could have helped pay on these into investments and retirement. While I strongly recommend contributing to a Roth IRA as early in life as you can, it is more financially advisable to use the extra income to pay off all of your debts first. You will be thankful that you did.

If when you graduate you have large amounts of credit card debt, large school loan debt, and a car payment, even with a decent job you will struggle paying for typical post college expenditures like a mortgage, wedding, utilities, and children. On the other hand, if you can minimize expenses and pay a significant portion of the debt off, you will be able to save more and put a large down payment on things like a house. I understand that debt like school loans may seem too large to payoff at this point in life, but it is still a good idea to pay on the interest bearing loans as much as you can.

Debt never magically goes away. Minimum payments are getting larger and prices are getting higher. Set yourself up for success. Pay off your debts, live frugally, and reap the rewards later.

3. Save, save, and then save.

After you have paid off most of your debts and don't feel quite as burdened, you need to begin saving. I understand with your part time job you are probably only bringing home around $500 to $800 a month, but it is still very possible to save a good deal of money. If you live at home, the largest monthly expense you have is probably your car (which I still strongly recommend paying off before saving, but I know how hard it is to not put away some money when you want to). Then insurance, cell phones, gas, shopping, and and food seem to take the rest of our check. There are ways to save money in this situation.The best way is to treat saving like a monthly expense. Set up a monthly budget and add savings to the list of expenditures. I also suggest opening a Roth IRA at this point in life as well. The younger you are when you do this, the more you will have in retirement. You may even be able to retire sooner if you wish.

Also try to cut expenditures. If you don't text much, get rid of the unlimited texting plan. Sell your car and buy a cheaper one. I did and am now 150 bucks richer every month. Don't eat out as much. If you live on your own, eat sandwiches.

I assure you that you will be extremely proud and happy with the fact that you had the motivation to save money. Transitioning to life after college will be much smoother. Would you rather have $5000 in credit card debt, or $5000 to put down on a house. Set yourself up for success.

The Path to Success

Remember that all college kids are usually struggling with school and debt. It is a sad situation, but you do not have to take on the role of this stereotypical student. You can make the choice at 18, 21, 25, or 45 to set yourself up for success. There is no way to get rich quick. There is no way obtaining your degree will suddenly eliminate the debt you accrue during school. Eliminating your debt obligations and saving for the future takes willpower, patience, hard work, and lifestyle changes, but its the fastest way to financial happiness.

"The longest way round is the shortest way home." - C.S Lewis


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    • Sethughes profile imageAUTHOR


      8 years ago

      Glad Im not the only one. I try to look at the stumbles in life as lessons learned. Maybe I will eventually get it right one of these days!

      I appreciate that. Im pretty new here but I really enjoy writing about things I have learned and/or am passionate about. Im glad you enjoyed it and am encouraged by your words about hub pages. Ill be sharing your hubs as well.

      Two heads are better than one! Maybe it'll happen. Glad to meet ya man.

    • Robert Erich profile image

      Robert Erich 

      8 years ago from California

      Seth! Dude, I can relate quite well. I had saved up a significant amount of money before spending it all (I was trying to start a business - this one ended up failing). It is rough sometimes to think about how much you could have right now if you had invested your time and money a little bit more intelligently.

      I like your article here and I am definitely going to share it with my followers. With the spend at which you are already writing I can tell that you are going to move up fast here on HubPages. It is a great place to make a bit of that residual income that will take care of us later on in life!

      Keep in touch, maybe we'll come up with some great business idea in the near future! ;) Peace man.

    • Sethughes profile imageAUTHOR


      8 years ago

      Thanks! And I feel for ya. We've all been there at one time or another. But if you enjoyed the experience then focus on that fact. We all learn lessons along the way. In my case it took several to teach me the same lesson. Lots of broke college student problems. lol

    • HLKeeley profile image

      HL Keeley 

      8 years ago from Charlotte, NC

      Very useful and shared with my followers! I really wish I knew this before I went to college in the middle of nowhere. I might have been more smart and have a little more money in my pockets. I also would have kept my job at Marshalls and transferred to one close to a university I got accepted at. Broke college student problems lol

    • Sethughes profile imageAUTHOR


      8 years ago

      I can respect that.

      I agree it is a shame that there are wasted tax dollars on kids who don't the education seriously. Still, I do feel for the ones who truly desire to learn and who cannot obtain the financial means.

    • SportsBetter profile image


      8 years ago from San Francisco

      Most kids come out of college with a worse education and can't find a job and end up in debt.

      My point is, the tax payer shouldn't have to pay for every person who wants to go to college. As you said most don't know what they want to do, and most of these kids don't find jobs. It is a waste of money and puts our economy in a worse situation. Government is not supposed to be handling college education, the market place should.

    • Sethughes profile imageAUTHOR


      8 years ago

      I think those billionaires represent a very small fraction of people and are extremely gifted. Most of need some sort of education in order to gain a better understanding of our career choice. It may not have to be a formal, classroom type of education, but that is the way I and many others learn best.

      I agree kids often never know what they want to do or be while in college and may pursue the wrong major. Still, the interpersonal skills learned are beneficial in helping them become employed.

      I can't blame the students for wanting to pursue an education. There are many of the who truly wish to make something of their lives. College is the best way they know how to do so. I also cannot assume that colleges wouldn't charge the same tuition without government student loans. They too are mostly profit oriented institutions.

    • SportsBetter profile image


      8 years ago from San Francisco

      What about the billionaires who dropped out of college? They didn't seem to need it. More and more people are learning from online education, for free.

      I know people who have gotten government loans for school and spent the money on everything but school. If the private market handled these loans I guarantee that wouldn't happen.

      The government is giving out loans to kids who haven't worked a day in their life. Most of them get into debt and can't afford to pay back the loan. A lot of these kids aren't ready for college and it is a waste.

      The college loan bubble is the next bubble to explode and the tax payers will be forced to bail them out, just like during the housing bubble.

      There are better solutions then choosing the lesser of two evils.

      And from experience, I learn more on the internet that I ever did from college. Kids are taking up useless majors and the education cost is so high and the quality is so low

    • Sethughes profile imageAUTHOR


      8 years ago

      I suppose if college was cheaper people like myself would be able to pay for it out of pocket. That is what many did in previous generations. I do wish more kids who are not able to attend college had the means to do so, but student loans are governments response to that problem. I agree it is not the best possible solution. I also agree government has played a role in driving education cost up.

      But as a solution to those who cannot afford to go to college, we are forced to choose the lesser of two evils. They can either not go, or accept loans or taxpayer funded grants. Yes, the private sector could play a role in this, but I would bet unless it was done on a very large, nationwide scale, the ones who wanted the loans would be the ones unable to obtain them in the private sector. It is adverse selection.

      More people need to attend college now because of the fact the world has evolved so much. We are not a manufacturing economy anymore. We are a service economy. Decent jobs require education. The solution to the problem isn't evident to me yet. The private sector seems most promising, but if they give these loans out and kids default, the financial system will collapse yet again.

    • SportsBetter profile image


      8 years ago from San Francisco

      You may have received grants but there are plenty of kids who don't get to go to college, they are the ones working to pay for your grants.

      Government giving out loans drives up prices, as you can see tuition is at the highest it has ever been. If the private sector was to give out loans, that would be the correct thing to do because it wouldn't cost the taxpayer.

      The Government just distorts the economy when they get involved. They were never intended to be an insurance program for everyone. Our system can not sustain this, and will collapse. Eventually the money will run out.

      Again, school was much cheaper before Government pushed up prices, so you could have afforded it without grants, just by working and saving.

    • Sethughes profile imageAUTHOR


      8 years ago

      I agree the government has probably given too many loans to too many people. But the government is a for profit institution. They are acting as a bank lender to millions of college age kids everywhere. Kids are the ones who choose to go to college. The government is attempting to satisfy that need.There does need to be some sort of regulation on this. I don't think that other lenders coming in and acting as competition to government lending would solve the problem. It would just drive education costs up.

      I can't say I am completely dissatisfied with governments role on this. I have received many grants that have handled much of my education costs recently. But yes, there does need to be stronger regulation on how loans are given. We saw what the lack of intervention did the economy and financial system in 09'. Education cost are too high, but what isn't these days?

    • SportsBetter profile image


      8 years ago from San Francisco

      Before not everyone attended college. If someone wanted to they would go to college. If they didn't there were plenty of jobs where they could learn on the job. Today there is a degree for everything.

      It all started when the Government decided to give easy loans for kids wanting to go to college. Although this seems like a good thing, kids were able to afford college by working because the cost wasn't so high. When government started handing out easy loans, they ended up pushing prices up.

      Prices go up in areas the Government invests because the they prints money to pay, which lowers the value of the currency. When the value of the currency lowers prices go up. This is the reason tuition costs are so high, the Government inflated education costs. Just like they inflated energy, and healthcare.

      This is the result of Government intervention in the market place. The market place creates competition in all areas, which creates competitive pricing.

      If Government wasn't involved in giving out loans, you might have not been in debt and that job you had could have paid for college because tuition cost would have been lower.

      Government isn't good at handling anything, the founders only intended for them to handle specific areas, which are listed in The Constitution. The Tenth Amendment of the Bill of Rights, states, everything not listed in the Constitution is to be left to the states.

      The states are supposed to handle all of these areas, such as, healthcare, energy, and education. The state is also supposed to handle social issues, for example gay marriage. Anyway that's Government for you, always looking out for themselves.


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