The impact of the pandemic upon college students who work to pay for education expenses is going to present some tricky choices and temptations.
Even before we tuned in to a labor shortage among restaurant workers and some retail jobs, we knew students tend to be cheaper to hire and are seen as more motivated and energetic. Those traits will be attractive now as employers monitor labor costs. Freshmen and sophomore college workers might be tempted to take on too many hours and jeopardize academic success.
Student-workers can prevent this by establishing at the onset clearly defined work schedules. There is research indicating that students working more than 15 hours a week could be trouble. Managers must be made aware of when classes are and be flexible during exams.
Students and parents should not get carried away with the buying power a job affords. Building healthy financial habits is crucial.
1. Create a budget and stick to it.
Start with your monthly inflows: scholarships and grants, part-time job income, the odd freelancing gig, or teaching assistant earnings. Next, list monthly outflows: food, transportation, and phone bill costs, as well as discretionary expenses such as entertainment. Subtract the outflows from the inflows to check how much you make monthly. If it’s positive, great! Keep it up and try to increase that number over time. If it’s negative, you’re creating debt.
2. Beware of the small costs.
Even the occasional $3 coffee and $8 fast-food lunch will add up, so keep those in check.
3. Watch your credit.
Though a credit card helps you build credit and get past temporary cash shortages, irresponsible use defeats its function. The card is a short-term loan that must be paid back in full. Carefully tracking your credit card expenses and starting with a low credit limit ($500 per month or so) are good strategies for avoiding a hefty bill at month’s end.
Libby Magliolo is an alumna of the SMU Dallas Cox MBA program. She leads a sales training team at Southwest Airlines and teaches college students (including those bound for SMU) about personal finance fundamentals.