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Money Management Basics

Money Management Basics

Why You Need to Read This

This guide is meant to help you get your finances organized and make the most out of your student budget. If you’re like most students at UCSB, you probably don’t have a trust fund or access to a millionaire uncle’s funds. In fact, most students around the country – and the world – must make ends meet on a shoestring budget.

That said, most high schools don’t teach the money management skills you need in college and you probably didn't have to handle your own finances, housing, and utilities before you left for college. It’s assumed that students will learn these things along the way, but the process can bring some hard-won lessons.

With the right information and some planning, learning to manage your money in college is great training for life. It will also help you maintain peace of mind and make the best of your years at UCSB. One of the most common things we hear from students about their finances is “I wish I had gotten my act together from the start.” This is your chance to do it. Being financially savvy doesn't come naturally – and the first step is getting all the facts.

To help you do this, we've included information on money management, financial aid basics, and financial problem solving, as well as a list of campus and community resources that might be useful to you. With a bit of organization up front and some discipline along the way, you can spare yourself a lot of stress and worry down the road. You’ll be glad you put in the effort.

Money Management Basics

There’s one thing we need to make clear from the start. Money management for college students is not about playing the stock market, flipping houses, or launching a start-up. In other words, it’s not about making as much money as you can. If you’re working as hard as you should on your classes, you shouldn't have time for that anyway. Instead, college student money management is about making a simple plan and living as financially stress-free as you can. On the one hand, you’ll need to secure the right amount of funding. On the other, you’ll need to keep your costs low and get comfortable with that shoestring budget. It’s that simple.

  1. Figure out your income sources 
    The first thing you’ll need to do – if you haven’t already done so – is figure out where your income will come from. How are you going to pay for tuition, fees, health insurance, housing, books, food, and other basic supplies? Most students rely heavily on federal and state financial aid and part-time employment or workstudy, sometimes supplemented by their personal savings and help from parents and relatives. Which of these are viable options for you? 

    If your family is not able to support the cost of your college education and you are eligible for financial aid, you will need to remember to file a FAFSA and Cal Grant GPA verification by March 2 each year. You should mark this date on your calendar and set reminders for yourself ahead of time. Although it’s possible to apply for financial aid after that, you will maximize the number of aid options you have by applying by March 2. To fill out a FAFSA, visit the Office of Financial Aid and Scholarships website and don’t hesitate to speak with a financial aid advisor if you have any questions. 

    You should keep in mind a few more general guidelines about financial aid. Federal financial aid is disbursed under condition that it be used only for educational expenses, which include basics such as rent, food, books, supplies, and personal care items. If you want to go on vacation or buy a luxury item, that should come out of your part-time job wages, your savings, or a gift from your family. In addition, when determining your loan amounts, try not to take out more than you actually need and never borrow on the basis of what you think you’ll earn shortly after college. Conversely, don’t underestimate the cost of a college education. The worse thing you can do is hesitate to get sufficient funding and struggle to make ends meet or even risk being lapsed for not paying your tuition on time. Finally, don’t let your grades slide and miss out on merit-based scholarships. School should be your first priority. 

    Each year, assess how much money you’ll need, find out how much financial aid you are eligible to receive, and figure out the balance of money you need to raise. For guidelines on how to do this, see the following sections on prioritizing and creating a budget. If you are able to, discuss any gaps between your available funding and your needs with your family to see if they can help. You will also want to keep an eye out for campus and community jobs that will help you both close the gap and build a compelling resume. For information on finding a job, see the “Why Federal Work-Study Works” and “Job Search” sections of this guide.
  2. Get clear on your priorities, needs, and wants 
    Getting clear on your priorities is the foundation of good money management. Keeping in mind your primary goal for being at UCSB – which should be making the most of your world-class education – will help you make financial choices that best support it. You will therefore want to prioritize tuition and fees, which establish your matriculation as a student and which should be included in your financial budget. These must be paid up front and in full by the prescribed deadlines in order for you to avoid being lapsed – in other words, having all your classes dropped and losing a quarter. 

    After tuition and fees have been paid, the remainder should cover your rent, food, books, supplies, personal care items, and related basic needs, helping to support your primary goal of being a healthy and successful student. The top of your priority list should include food and shelter, because without either of these you can’t really function in college. Your money should therefore be allocated to covering all of your housing costs before, let’s say, buying a new computer. Sure, it’s nice to have a sleek MacBook Pro, but purchasing that at the beginning of the term and shorting yourself on rent or food money in December isn’t exactly prioritizing. UCSB has several computing labs. You might consider carrying a memory stick or emailing files to yourself and using these labs for your computing needs. 

    What about expensive cell phones? Do you really need internet access on both your computer and mobile device? Cell phone bills including data service plans can add up to a lot of money over a year. Are you skipping meals to pay for such extras? Having a smartphone or a nice laptop to crank out your term papers may seem necessary for staying connected and ahead of the game. In reality, these are areas where you can save money when push comes to shove. If a computer is a must-have, figuring out how to pay for it without eating into other, necessary categories in your budget will be critical. 

    Think of it this way: if it comes down to choosing between paying rent or a new clutch for your car, pick the rent! The car can wait, but an eviction notice won’t. What if your choice is between your schoolbooks and the car repairs? School should win every time. Prioritizing requires that you fit all your potential expenses into a hierarchical schema of needs versus wants for even the smallest things: Starbucks vs. home-made coffee. Newly released running shoes vs. sale-priced ones vs. the ones you already have. New books vs. used books vs. the library. Car vs. bus vs. bike. Banana Republic vs. The GAP vs. outlet stores vs. second-hand. You get the point. 

    Finally, avoid waste. Financial waste is any unnecessary expense that could have been prevented with some foresight, planning, or restraint. The cost of traffic or other violations, library overdue fees, late payment fees, and overdraft fees, to name a few but common examples, can really add up. One way of prioritizing on a quarterly basis is to set aside your money for rent, utilities, or other critical items as soon as you receive your financial aid. You can transfer these funds into an account that’s separate from your everyday spending one. On a monthly basis, pay first those things that will keep you sheltered, fed, and in school. Then pay for the rest. 

    While you should never skirt your financial commitments, you should pick and choose wisely about the sequencing of your bill payments. For example, when faced with a choice between paying credit card bills vs. groceries for the week, what should you do? Do you pay the credit card and then buy food on the same credit card? Or do you call your creditor and explain your financial hardship and pay cash for groceries? There is no magical formula for getting yourself out of a financial bind and no single piece of advice will work for everyone. You have to weigh all your options to get the maximum benefit and minimal damage. What you absolutely shouldn't do is ignore the issue and do nothing to get help.
  3. Create a budget
    A budget is a tool that allows you to track your income and expenses in a given period and make the needed adjustments along the way. It will also help you set spending limits and plan ahead for special events or other needs in the future. 

    You should create a budget and spending plan as early as possible each year. To accomplish this, you’ll need to do two things first: (1) review your income sources, amounts, and disbursement timelines, and (2) assess your needs and spending priorities. The previous two sections will help you do both. You can then create a quarterly, monthly, and even weekly budget. If you exceed your spending plan on a given week, don’t give up on your budget. This is meant to be a dynamic process and allow for adjustments as you gain insight into your situation and habits. The goal, however, should be to refine your budget and monitor your spending so that you are breaking even each month and, ideally, even saving a little money. This will come in handy in case of unforeseen but necessary expenses or emergencies. 

    You can find some sample budget templates in the “Worksheets” section of this guide and access these templates in a convenient online calculator format at You might also look for smartphone apps that offer simple budgeting and money management tools, which can be useful if you’re committed to tracking your expenses in real time or on the go.
  4. Get organized
    • Create a paper filing system that works for you. Store your documents in a safe place.
      • Even if you’re aiming to go paperless, there are some paper documents you’ll need to save – at least for a while. These include rental and loan agreements, pay stubs, tax forms, copies of your insurance cards, medical bills, and so on. Tax documents, for example, should be saved for seven years.
      • Create a separate filing folder for each relevant category: Housing, Utilities, Financial Aid, Medical Insurance, Medical Bills, Cell Phone, Misc. Receipts, etc. You might want to buy a filing box or accordion-style folder or find a copy paper box to store them.
      • Keep these documents in a safe place and lock your doors and windows when you’re not home. Crimes of opportunity do happen and you don’t want anyone taking off with your birth certificate, passport, Social Security card, or credit card information. (For your most important and hard-to-replace items, you might consider leaving originals back home with your parents or having them stored in a bank safety deposit box. You should make copies of everything in case you need to reference the information).
    • Create a financial calendar, either online or on paper, that will easily remind you of BARC, financial aid, bill payment, rent, and other deadlines throughout the year. Include reminders at least one week in advance to ensure that payments will arrive on time (even online payments can take a few days to post).
    • If your parents or someone else will be responsible for paying a part or all of your BARC bill, you will want to set up BARC access for them by following the instructions found at Make sure that your fees are paid on time each quarter to avoid falling into lapsed status and losing all your classes.
    • Create a simple, no-stress plan for paying which you’ll learn more about in the next section.
  5. Create a no-stress plan for paying your bills 
    Coming up with a plan up front – one that really works for you – is the easiest way to save yourself a lot of hassle, as well as the negative consequences of missing payments, ruining your credit, and dealing with creditors and collection agencies. There are a few things you can do from the start to make paying bills easy. 

    First of all, choose how you want to receive your bills. Many creditors will offer the following options:
    • Paper mail. Some people prefer this method – and that’s fine if it works for you. Just make sure you check your mailbox frequently and change your address on record with your creditors as soon as you move. If you don’t receive a bill in your mailbox, you are still responsible for making payments by their due dates so make sure you keep a checklist of what you need to pay.
    • Paperless. With paperless billing, you won’t receive your bills in the mail but you’ll be sent billing reminders via email or text message. You will then need to log into your account and arrange for payment (either via a check in the mail or through some form of electronic transaction). The advantage of going paperless is that, when you move at the end of the year, you’ll still get your billing reminders even if you forget to change the address your creditors have on file. Plus it’s environmentally friendly and you won’t have to buy a shredder.
    Second, put in place a plan for paying each bill on time. Make a list of all your bills and their due dates and figure out how you’re going to pay each of them. You may choose a different option for each creditor or use one method across the board. Here are some options: 
    • Send a check in the mail – Create calendar reminders so that you remember to mail your payment at least one week in advance of its due date. Many people like online calendar reminders, but a wall calendar or day planner works just as well. What’s important is that you actually reference it on a regular basis.
    • Set up autopay– Some creditors will allow you to set up autopay through their website and select a regular payment date each month. If you choose to pay through your checking account or debit card, make sure you have funds in your account on that date each month to avoid overdraft fees – these can be as expensive as $40 a shot … and it adds up! Make sure you set up autopay only with reputable companies with secure websites and do your homework to avoid surprise “extra” charges. Also, you will want to check your billing or bank statements each month to make sure that you were charged the correct amount.
    • Set up payments through your bank These can be set up as one-time or recurring payments. Recurring payments work well when you owe the same amount each month. You can then submit a request that your bank pay your creditor by sending a check for a certain amount on a certain date each month. Some people are able to set up all their payments automatically and just keep an eye on their accounts to make sure that they’re being billed properly. If you can pull this off, more power – and free time – to you! 

      Here’s another thing to keep in mind. If you’re in a residence hall, many common “bills” will be taken care of up front, including essential utilities like heat, electricity, water, and meal plans, which will be part of your housing contract. Off-campus renters, however, will need to coordinate with their housemates how and when these bills will be paid. If you’re the name on record for any of the utility bills, for example, don’t establish a precedent of paying the entire bill yourself and collecting from your housemates afterward. If they’re not as conscientious as you, you may end up shortchanged. At the same time, don’t neglect these bills and do make a strong effort to collect from housemates in advance so you can make payments on time or even early. You will want to discuss these and similar topics with potential roommates before contracts are signed. Establishing clear ground rules early will help you preserve both your finances and your friendships. 

      Finally, keep your contact and billing information up to date with your creditors. This includes both email and mailing addresses. You should change your address on file with the U.S. Postal Service and each of your creditors each time you move (including going home for the summer and to study abroad) to make sure you receive important notifications. Even if you’re signed up for paperless billing, some companies will still send you occasional time-sensitive notices via paper mail. Additionally, if you’re signed up to pay bills through a credit or debit card on autopay, make sure that you update your card information when it expires or you’re issued a new card (this can happen when your institution notices suspicious third-party activity on your account or when you lose your card and are issued a new one). A final note on travel and study abroad: notify your bank or credit card company about your travel plans to avoid their shutting down your card for suspicious activity. Banks do this to protect their customers, but it can spell trouble if you’re stranded in Rome with no access to cash.
  6. “Bank” smart
    In choosing a bank or credit union, make sure you do your homework up front. Visit their website or meet with an account representative at the nearest branch. Some questions you’ll want to ask include: Is there an annual fee? Do they have free checking and savings accounts for students? Do you need to have a minimum account balance in order to avoid fees? Do they have an ATM conveniently located near you? What are the fees for using out-of-network ATMs? Do they offer overdraft protection – and how much does it cost? Do they offer low account balance notification? What kinds of online banking options are there? And so on. In finding the best plan for you, you will also want to aim for minimal or no regular fees. 

    Once you’ve chosen a bank, one of the most important things you can do is set up online or mobile banking by signing up for an account on your bank’s website. This will give you 24/7 access to your account information and help you track the status of your deposits and spending. It will also make it easier to send payments to creditors, pay bills, and transfer funds. Additionally, you might want to sign up to go paperless, which means that you’ll receive your monthly statement notifications via email. This helps to protect against identity theft and saves trees. 

    In addition to banks, many other businesses offer paper and paperless billing options. This may not be the case for your landlord, who may ask you to put a check in the mail or hand-deliver it each month, but most phone, utility, and credit card companies will provide you with those options. Usually, the default is paper mail and you’ll need to create/log into your online account to select paperless billing. One of the ways you could keep up with your monthly bills is to set up autopay from your checking account or credit or debit card. This will give you peace of mind and ensure that things are paid on time, but you will need to stay on top of your account balance to avoid overdrafts and make sure that you are being billed the correct amounts. Any suspicious or unreasonable charges should be reported immediately to your creditor and your bank. 

    Another convenient online banking option involves signing up to receive low account balance notifications for your checking account. Some banks offer this for free. It’s a great way to know when you’re low on funds and will help you prevent overdraft or bounced check fees. These can be as much as $40 each time. If you do receive an overdraft fee, you can attempt to call your bank immediately and ask if they’d be willing to remove it. Some banks will honor your request if you present extenuating circumstances. The most important things you can do to avoid overdraft fees, however, are stay within your budget, track your expenses, and make a habit of regularly checking your balance.
  7. Keep it secure
    No matter how you decide to do your banking, pay your bills, or make purchases, remember that security is your top priority. Here are some best practices to prevent identity theft and fraud in general:
    • Log out of websites on public computers after you use them.
    • For online purchases, make sure you use only secure, encrypted websites.
    • Never share your passwords with anyone. If you have a hard time remembering them, devise some kind of mnemonic aid or acronym that will help you. For example, the sentence “My dog Skip loves treats at 2 and 5 a.m.!” would help you create and remember a password as cryptic as: “MdSlta2a5a!” In general, secure passwords do not utilize common or dictionary words, birth dates, sequences like 123, or other information that can be readily guessed or associated with you. Strong passwords will include a combination of uppercase and lowercase letters, numbers, and punctuation marks.
    • Shred any documents that contain personal information like your credit card, bank account, or Social Security numbers, as well as junk mail credit card offers, which can be used in identity theft. Similarly, don’t give anyone your credit card, bank account, or Social Security numbers unless you’re absolutely clear about why that’s necessary. In particular, don’t share any personal information with anyone who calls you to request it. Rather, ask what business they’re from, verify the contact information, and call them back to play it safe. Similarly, never reply to emails requesting your personal information or be very careful to check the legitimacy of any links and landing pages where they lead you. This will protect you from a common, fraudulent practice known as “phishing.”
    • If you notice any suspicious activity on your bank accounts or credit card statements, report this 10 money matters | ucsb financial resource guide to your bank or credit card agency immediately. If you suspect identity theft, report this to the police as well.
    • Lock your windows and doors when you’re not home and keep your personal documents in a safe place away from housemates and unexpected houseguests. If you lose your wallet or have it stolen, report this immediately to the police and any relevant bank and credit card companies.
  8. Avoid credit card debt
    Most money management guides for college students recommend against – or strongly discourage – credit card use. We know that you may already have one or choose to apply for one in the future, however, and you should be familiar with some general recommendations around its use. 

    In general, it’s best to have only one credit card. It should have the lowest fixed interest rate possible and no annual fees. You should use it sparingly and make sure that you only charge what you can pay for in full at the end of each monthly billing cycle. This will prevent your account from being charged interest, which can add up significantly over time. If you have an emergency and must charge more than you can pay off in one month, you should give yourself no more than three months to repay the balance. Also, you will want to keep your maximum limit low to create a spending cap and prevent yourself from incurring an unreasonable amount of debt. If your credit card company increases your limit, which they may do without warning, you can request that they lower it. 

    The consequences of not making credit card payments on time or at all can be dire. These range from being charged late fees and having your interest rate shoot through the roof to ruining your credit score and being pursued by collection agencies – a situation that is both stressful and takes considerable time to repair. Make sure that you make your payments ahead of their due dates (at least a week in advance) to take into account mail times and online transaction delays. 

    If you already have significant credit card debt, you should at least make minimum payments each month – or even a bit more to get ahead. If your debt seems unmanageable and you’re not able to make even the minimum payments, you should contact your credit card company immediately to see if any arrangements, including low-interest repayment plans, can be made. You are also encouraged to visit the “Credit Counseling” section of this guide for useful links and to learn more about the Associated Students Legal Resource Center, which can provide guidance to students on credit issues.
  9. Get help fast when you need it
    When you sense financial trouble on the horizon, act quickly. The longer you wait, the harder it can be to resolve financial difficulties. For example, calling your creditors ahead of time when you can’t make your monthly payments is always a good idea. They can offer alternative repayment options, like waiving late charges, temporarily freezing interest rates, and reducing the monthly repayment amounts. They may even be willing to settle a debt for less than what is owed, but you will not know any of this until you call them. If you wait until you’re past your payment deadlines, you’ve narrowed down your options significantly. 

    If you’re experiencing an emergency situation, there are many useful campus resources that can make a difference. If this is a chronic situation, you should make sure to meet with the campus experts, who will help you come up with a plan of action for the long term. This could include borrowing that unsubsidized or Graduate PLUS loan you were avoiding at all costs, asking your family for help, or increasing your work hours. In some cases, students opt to take a break from UCSB to work full time or attend community college until they’re back on their feet. 

    Whatever you do, however, don’t make any major decisions until you’ve spoken with campus staff, including a financial aid advisor, and learned about all your options. You can start with the If You’re Struggling Financially and Resources sections of this guide to learn where to get help. UCSB staff from numerous departments are available and eager to help you – and they’ve seen it all. No matter how serious, far-gone, or hopeless your situation seems, there is always a solution. People in far worse situations have managed to come out of them with the right support and the discipline to follow through. And you can too!