Better Money Management

Financial distress is one of the main causes leading to student drop-out from college. A number of money management strategies can help you get more out of your money and avoid financial problems that can imperil your educational goals.

1. Budget any Pell grant money you receive so that it lasts all semester. Importantly, do not spend your Pell grant money if you plan to drop a course within the first two weeks of the semester, as you will need to return some of your Pell grant money in this case.

2. Over the course of a month, record all of your expenses. Compare your total monthly expenses to your total monthly income. If your monthly income proves insufficient, look for expenses that you can cut or reduce next month. If your income is still short, consider the prudent use of educational loans. In the long run, use of an educational loan is much wiser than use of high-interest credit cards.

3. Pay off your high-interest credit cards. Close credit card accounts so that you only have 1 or 2 credit cards. Though easy to use, credit card debt easily spirals out of control and may cause significant financial problems in your future.

4. Budget 10% of your monthly income for savings. It is important to have a "rainy day fund" so that you have some money available for unexpected costs - i.e. emergency room visit, car repairs, moving expenses. Otherwise, these unexpected costs have the potential to push you over the tipping point.

5. Consider insurance. While no one likes paying the monthly premiums for auto, health, or renter's/home insurance, these types of insurance help reduce your financial risk in the case that the unexpected happens. It also provides peace of mind that you have a financial safety net.