2021 Hawai‘i College Guide: Spending Wisely at College

Drive-through graduations and Zoom celebrations may hopefully be milestones of the past. Getting ready for college now and in the near future, however, still has ongoing challenges, especially higher concern over money management.

“Many families are facing a different story from what they had imagined for their child’s college education. But there is much to be excited and hopeful about starting with these first steps for college and beyond. Students have a big part in making this happen with wise choices that make personal and financial wellness a lifelong priority,” says Karl Yoneshige, President and CEO of HawaiiUSA Federal Credit Union, which has been helping families prepare for college for more than 80 years.

What can students do financially to make their goal of higher education achievable? Here is what the experts at HawaiiUSA Federal Credit Union offered as advice on what students can learn and control to make college a financial reality.

Get accounts that multi-task

College is a time of learning, exploration and growth. For Island youth, especially college freshmen going away from Hawai‘i for the first time, it can be a hectic time—from buying winter clothing, living in a dorm with a roommate, to navigating classes in a new school in a new city. It can be a lot to absorb, but it is also time to learn skills that can last a lifetime, long after you have forgotten Psych 101 or the taste of dorm food.

College is the ideal time to start developing good financial habits such as establishing sustainable spending behaviors that will serve you well after graduation. And knowing what banking and financial tools are available can help you plan and stick to a budget.

One way to make the most of your time and money is to get an account that multi-tasks. While P2P apps are great for splitting the lunch bill with friends, why not use one account to easily pay people, make purchases and even receive deposits from family and your part-time job? Would you be surprised to learn that a checking account can do all of that? Even if you never write a check, a checking account is a great way to track all your income and out-go in one place.

Another multi-tasking feature is an account that earns rewards. While rewards credit cards are common, checking accounts that pay cash back are not. “Unlike credit cards, you don’t need credit history to qualify, and checking accounts don’t have the annual fees and interest payments that credit cards do. As long as you spend within your means, they’re a wise choice for college students,” says Kim Dodson, Financial Wellness Manager at HawaiiUSA.

In addition to earning cash back on purchases, checking account rewards may include reimbursements on ATM fees. This is especially valuable if you are going away to the Mainland for college, where there may not be a branch of your local financial institution nearby. For those with a credit union account, such as HawaiiUSA members, you can still avoid additional fees every time you go to an ATM by using the CO-OP Shared Branching and ATM Network.

Go digital: Spend less than you make

Some of the most important uses for your smart phone are digital banking tools that offer contactless convenience, security, and personal safety by minimizing trips to a bank branch. Use your smart phone to make a mobile deposit by taking a picture of a check and depositing it electronically to boost your checking account balance. Mobile wallet offers advantages over carrying around physical debit or credit cards to make payments. Whether using Apple Pay, Google Pay, MasterPass or Samsung Pay, mobile wallets simplify the in-person or online checkout process with one account, in addition to protection protocols providing extra security benefits. It also can be nice to not need to carry your wallet or loose cards when you are going to the gym or beach.

You can also make tracking your spending easier and more secure by adding notifications and alerts to help you stay on budget and guide financially healthy habits. Enroll in text message or email alerts that can tell you such things as each time your debit card is used, or your checking account balance for that day. In a time crunch because of classes, midterm exams or part-time work? Set up a text, email, or push notification that alerts you when your account balance dips to a specified dollar amount.

“Notifications serve two important purposes. They help you keep track of your spending to avoid overdraft fees. They also alert you of potentially fraudulent activity on your account,” says Dodson.

Healthy spending builds healthy credit

“Managing your own money wisely is the foundation for building good credit,” says Dodson. “When you have practiced healthy spending habits, you start to show your trustworthiness for credit.”

Whether to use debit or credit cards for spending at college depends on personal and family considerations, as well as financial goals, say the experts. Both provide easy purchasing, but through different means. Debit cards help build healthy financial habits by giving you access to your checking account and ATMs that require responsible money management. You must maintain and spend within that account balance.

Credit cards can help build your credit history by extending you borrowed money that also requires responsible money management because of interest rates charged for the use of that line of credit. If you can consistently pay your credit card bill on time and in full, you can establish good credit early and avoid significant credit card debt. And by building your credit you can put yourself in a better position to take out an auto loan, rent an apartment and even get a job that requires a background check.

The wise money habits you build during school will also come in handy once it is time to pay back student loans. It’s true that the monthly payments will increase your expenses, but balanced with a post-degree salary and the money management skills you’ve learned, you’ll be well-prepared.

College is a time to try new things, including exploring what it means to be financially well. As you begin an exciting chapter in your life, know that you have the support to do it on your own, but you are not alone.

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