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How to Avoid Common Financial Pitfalls as a College Student: Tips for a Secure Financial Future

Your college years can be a transformative time, buzzing with new experiences, relationships, and possibility. You may be living away from home for the first time, perhaps living in a whole new state or country. With this exciting time comes new life skills to learn, such as budgeting and managing your money. In this article, we’ll walk you through important steps such as building a budget, establishing a credit score, and avoiding common pitfalls like scholarship scams and credit card debt.


Build a Budget and Cut Costs

Are you leaving home to go to college? Commuting to a local school? Living on or off campus? Before the fall semester begins, take some time to review your situation and budget for fixed and anticipated expenses. It’s a good idea to ask a parent or other trusted adult for help reviewing your budget. They may be able to point out something you missed or help you more realistically estimate certain expenses.


There is no one right way to budget, though a college student’s budget should be fairly simple (things will get complicated later in life as you marry, buy a house, have kids, etc.). You can find free spreadsheet templates and apps online to help you create and manage a budget.

At its core, a budget is simply your monthly income minus expenses. This includes fixed expenses such as transportation, housing, and food, as well as discretionary spending on entertainment and other non-essentials. Some tips for creating and sticking to a budget include:

  • List your financial goals, such as saving for a big purchase or travel.
  • List your monthly income from a part-time or work study job, any money your parents give you, etc.
  • List your monthly expenses.
  • Don’t forget quarterly or annual expenses such as buying textbooks each semester.
  • Track your spending–this helps you see where your money is actually going, so you can budget and make changes accordingly.
  • Be prepared to make adjustments from month to month as you begin to use your budget and track your spending.

If the math simply doesn’t add up, look at ways to reduce your expenses:

  • Walk or cycle instead of driving.
  • If possible, cook at home and share family-style meals with roommates to reduce grocery expenses and food waste.
  • Evaluate your living conditions—it’s often less expensive to live in a dorm or other on-campus housing with a shared room or bathroom than to have your own apartment.
  • Don’t buy textbooks from the school bookstore. It’s often easier to buy online or through sharing platforms or social media groups. You can also rent instead of buying. Just pay attention to the required editions to ensure you are getting the right textbook.

Begin Building a Solid Credit Score

Young adulthood is the time to start building a positive credit history.

Credit scores are compiled with information collected from your credit report. This includes whether or not you pay your bills on time, manage debt responsibly, etc.

As a college student, you shouldn’t have much or any debt to manage (other than student loans), but putting at least one utility account in your name and paying the bill on time each month will help you build a good credit score. The same goes for cell phone bills.

One of the best ways to build credit is also the most dangerous. Getting a credit card with a low credit line and paying it off in full each and every much will help you build a positive credit history. However, if you don’t use your credit card responsibly (making only minimu payments on a larger balance or missing payment due dates altogether) will not only hurt your credit score, but it will also hurt you financially.

Apply for a Peoples Bank Visa® Credit Card to earn 0.5% cash back on all your purchases.

Fill out a FAFSA Form and Apply for Scholarships

Many students don’t realize they might be eligible for financial aid or scholarships. It’s important to apply every year, regardless of what you qualify for. All colleges and universities use the Free Application for Federal Student Aid (FAFSA) to determine students’ financial aid packages. You should fill out the FAFSA on time every year to be considered for grants, scholarships, and other aid.

In addition to your school’s financial aid package, you can apply for external scholarships to help pay for college. Your high school guidance counselor should be able to recommend local and national scholarships you can apply for. Look around your community as well to see if any local institutions offer scholarships.

Avoid Financial Aid and Scholarship Scams

Unfortunately, as the cost of a college education has increased, scammers try to capitalize on students’ need for assistance with financial aid and scholarship scams. Learn to recognize these scams so you don’t fall victim to identity theft or lose money.

What do scholarship scams look like?

These scams often start with a personalized social media post, letter, or email to inform you that you’ve been selected for a scholarship or financial aid. There is usually a call back number, website to visit, or in-person workshop.

Financial Aid Scam Red Flags

  • Requiring payment for applications
  • Offering guaranteed awards
  • Offering to do the financial aid application for you (for a fee)
  • Claims of exclusive information not available anywhere else
  • Requests for a credit card number to hold the scholarship
  • Telling you that you are a finalist for a scholarship that you didn’t apply for

The FTC has more information on scholarship and financial aid scams here.

Your Partner in a Secure Financial Future

It’s important to have a good partner in your local bank as you navigate your young adult years. While you can learn from the adults in your life, don’t forget that you also have a local financial expert ready to help you strategize and plan for the future. Talk with our bankers today or visit your nearest Peoples Bank location in Iowa, Minnesota, or South Dakota.



Q: Why is budgeting important for college students, and what are some essential steps to create and maintain a budget?

A: Budgeting is crucial for college students to manage finances effectively. Steps include setting goals, listing income and expenses, tracking spending, and making adjustments when needed.

Q: How can college students begin building a solid credit score, and what are some potential risks associated with credit card use?

A: Building a credit score involves responsible habits, like timely utility bill payments and using a low credit card limit wisely. Risks include credit card debt and missed payments affecting the credit score negatively.

Q: What financial aid options are available to college students, and what is the significance of filling out the FAFSA form every year?

A: Financial aid options for students include grants, scholarships, work-study, and federal student loans. Filling out the FAFSA annually is vital for determining eligibility.

 Q: What are scholarship scams, and how can college students identify and avoid falling victim to them?

A: Scholarship scams are fraudulent schemes targeting students seeking financial aid. Red flags include payment requests, guarantees, and unsolicited offers.

Q: In what ways can college students cut costs and reduce expenses while attending school?

A: To cut costs, students can walk or cycle, cook at home, explore on-campus housing, and buy or rent textbooks online.

Q: Why is it beneficial for college students to have a local bank as a financial partner, and what services can they offer to help students plan for a secure financial future?

A: Having a local bank as a financial partner offers personalized assistance for savings, credit advice, financial planning, and handling student loans and aid matters. They promote responsible money management for a secure financial future.