How to Educate Students on Budgeting

How to Educate Students on Budgeting

Maybe their personal finance skills were acquired through playing Monopoly or the allowance they earned, or maybe they didn’t learn it at all, but a critical skill most students are lacking is the ability to manage their finances. Only 23 states across the U.S. require high school students to take a class or be tested on financial literacy. And with only 39 percent of four-year college students use personal budgets, it’s no surprise that educating students on managing finances should be a priority.

If you think about it, a student who budgets now is most likely to budget when they graduate, including their student loan repayment. Start educating students about budgeting today with these tips.

Eliminate the Notion a Budget Isn’t Needed: Sometimes the word ‘budget’ can be associated with limiting the freedom to spend or restricting the fun in college. This is a misconception that needs to be busted. Twist it around for students, so the understanding is a little discipline now can pay off later. Budgeting allows the freedom later in life to purchase a home and not worry about making a student loan payment at the same time. It may mean ordering one less drink, but this could lead to making one less student loan payment.

Help Them Set Some Financial Goals: Nothing can be achieved if there isn’t a goal to work towards. This applies to budgeting as well. Sitting down with a student to discuss what their financial goals are can give them something to save or work for. Here are some ideas to help get the goal-setting started with a student:

  1. Save a designated amount
  2. Build an emergency fund
  3.  Pay for a semester of college themselves
  4. Pay their Bursar or Financial bill for the semester

Deciding what to save for can help establish what their budget needs to look like and what they should be cutting out. This leads us to the next tip.

Learn to Track Their Spending Habits: You’ve got to tell your money what to do or it will leave. To know where money is going, students need to consistently track their spending. Students can use apps like Mint that can track spending and alert them once they’ve reached the allocated budget for that category.

Creating a workshop for students to attend, or getting in front of them during freshman orientation classes is a great start to engage students and present budget education. For more ideas on how to implement budgeting education, take a look at what the University of Montana is doing. Has your college or university started taking action when it comes to educating student on budgeting and finances?