Getting Ready for College

Budgeting and managing your finances: For college students

College is the first time many students will manage their own day-to-day finances—while also juggling classes and homework, internships, extracurriculars, and time with family and friends. Creating a budget and structuring your accounts to support your spending and saving can help you get into a financial routine and give you more time to focus on the rest.

This article shares information and tips to help you get started. As you build the foundation for managing your personal finances your parents or legal guardians can be a valuable resource. Don’t hesitate to ask questions as they come up.

Building good financial habits

Creating a budget involves planning, understanding tradeoffs, and adjusting habits over time—essential skills no matter what stage of life you’re in. 

A budget can help you see where your money is going each month and manage your expenses (expected and unexpected). Regularly reviewing your cash flow now will help you as your finances become more complex over time.

College budgeting tips

Estimate your income and expenses

Budgeting is about balancing your income and expenses.
 
To calculate your monthly income:

• Identify your sources of income. This could include a monthly allowance, pay you receive from a job or internship, distributions from a trust, and investment income.
• Estimate your monthly income from each source. If these funds are deposited directly into your bank account, you can look at your statement to find these amounts.

To calculate your monthly expenses:

• List your fixed costs. These could include housing or rent, insurance, and other regular expenses at set amounts.
• Estimate your variable costs. These could be food, books, supplies, travel, social outings with friends, and other spending money.

Look at your net cash flow

If your income is greater than your expenses, you could use your monthly surplus to make progress toward your financial goals—including those for after you graduate. Are you planning to move to your own apartment or buy a house? Take a big vacation? Go to grad school?

If your expenses are greater than your income, you may decide to make adjustments to reduce your expenses.

Stick to your budget and update it regularly

Having a budget in place can make it easier to spend on the things that are important to you and keep you on track for your financial goals. A budget doesn’t have to be set in stone, especially when you’re in college and your income and expenses can change from term to term.

Your budget grows and changes as your financial picture evolves.

Using financial accounts to support your goals

Use different accounts to keep your spending and saving separate

Setting up different accounts can help you separate your savings from the funds you plan to use for your college expenses (like room and board, books, entertainment, and travel).

Consider your options

Different types of accounts offer different benefits and drawbacks.

Checking
A checking account lets you make deposits and withdrawals with relative ease.

Checking accounts can help you with day-to-day goals like:

• Automating your payments to ensure you pay bills on time (which helps build up your credit).
• Tracking your spending.

Benefits

• Your funds are liquid — you can access them as needed.
• You can access cash via an ATM.
• You can request paper checks, as needed.
• With a checking account, you are able to make wire transfers.
• For accounts that allow it, you can set up autopay from your checking account.
• You can make electronic payments from your checking account.

Considerations

• You may run into fees, including ATM and/or transaction fees.
• Checking accounts earn little to no interest.

Savings
Savings accounts can help you manage and grow your wealth. Different types of savings accounts come with different benefits. Some accounts offer higher interest rates, personalized financial advice, and additional features like investment options and educational resources.

Savings accounts can help you with short-term goals like:

• Earmarking funds for a down payment on a house.
• Setting aside money for a trip or hobby.

Benefits

• You can deposit money in a savings account for safekeeping.
• The funds in your account earn interest over time.

Considerations

• The interest rate you earn depends on what type of savings account you use.

Investing
Investing allows you to grow your money over time but does come with potential risks. Different investment vehicles (e.g., stocks, bonds, alternatives) come with their own levels of inherent risks and rewards. For example, stocks can offer higher returns but are more volatile, while bonds are generally less risky but may provide lower returns. Understanding your personal risk tolerance—how much risk you are comfortable taking—can help you make informed decisions and choose the right investment strategies that align with your financial goals and values.

Investing can help you with longer-term goals like:

• Growing your wealth and securing your family legacy.
• Supporting a cause that you care about through impact investing.
• Funding your education and future career opportunities.
• Building a strong financial foundation for your retirement.

Benefits

• The potential returns are higher than with a savings account.
• Depending on your interests, you can take a more active role in which types of companies you invest in.

Considerations

• The potential risks are higher than with a savings account.

Managing your finances and using your resources

Remember, you don’t have to figure out your finances on your own. Your parents or legal guardians can be a valuable resource. Even though money can be a sensitive topic to talk about, they will likely have a good deal of financial wisdom, with real-life examples, to share. 

Your Goldman Sachs team can also provide guidance and support.

Healthcare and Insurance Coverage While You’re in College

For some students, going away to college may be the first time living away from home. As you get ready to go, here are a few things to consider.

Healthcare

When you turn 18, your interactions with healthcare providers change. As a legal adult, the boundaries protecting your privacy strengthen to include only you—unless you give express permission otherwise. 

Even if you are covered under your parents’ health insurance (you’re eligible until age 26) healthcare providers legally cannot share information with them without your permission. Your parents will also be unable to make medical and financial decisions on your behalf without permission.

By completing a few simple documents, you can give your parents the ability to see your medical information and make decisions if you are unable to.

• HIPAA Release/Authorization allows medical providers to speak with a parent or guardian regarding your medical information. Your college may have their own specific forms that would need to be filed.
• Advance Directive/Health Care Proxy provides permission to your parent or guardian to make healthcare decisions on your behalf if you are unable to do so. These forms differ by state, so if you’re going to college outside your home state, you may need to file different forms.
• Financial Durable Power of Attorney allows your parent or guardian to take care of financial decisions on your behalf (e.g., sign tax returns, access bank accounts, pay bills, etc.)

Property and Casualty Insurance

Your parents’ property and casualty insurance may cover you while you’re in school. Your coverage outside the home will depend on the policy.

Potential reasons for additional coverage

• If you will be living in a dorm room, you may want additional coverage for your valuables (e.g., jewelry, musical instruments, computer, phone, tablets, gaming systems, and other expensive items). Your parents’ policy will generally extend over your belongings, up to a 10% limit of their personal property coverage, subject to a deductible. (Your parents and their insurance agent and advisor will know the specifics of the policy.)
• If you will be living off campus, you may need a separate renter’s policy with liability insurance to cover both your belongings and any accidental damage on the premises.
• If you’re bringing your car and it’s covered under your parents’ insurance, the location change may impact the policy.

List of contacts and accounts

While you’re usually only a text or call away, it may help create peace of mind if you share a list with your parents or legal guardians that includes:  

• Your bank accounts
• Online accounts
• Your social media accounts
• Credit cards
• Insurance policies
• Your immunization records
• Your prescription medications
• Contact information for attorneys, bankers, and insurance agents

Getting ready to move out, even if it’s temporary, is a big undertaking. Speak with your Goldman Sachs team to help make sure you have what you need and are prepared in case of emergency.