As a student, you have many important housing decisions to make. Will you be living in a dorm or an off-campus apartment? Alone or with roommates? And how are you going to cover the expenses?
If these questions make your head spin, you’re not alone. But approaching them thoughtfully can make your decisions more liveable.
Since many freshmen are randomly assigned a roommate, many do not form a bond that will persist throughout their college career. Given this, who you choose to share your space with is perhaps one of the most important decisions you can make regarding university housing.
Trust and respect are among the most important factors you should consider, both in terms of comfort and feeling safe, and the potential impact on your finances. For example, if you and your roommates each appear as signatories to a lease, not paying rent on time could negatively affect your credit score, even if you paid your share on time.
Money discussions can be uncomfortable, but it’s important to recognize that when you sign a lease with a roommate, you’re not just agreeing to share a space — you’re entering into a formal financial agreement.
Establish some ground rules
If you choose to live with roommates, agree on house rules. Establishing a common understanding of sharing, chores, schedules, visitors, noise, and food can help you avoid awkward and frustrating situations in the future (and possibly keep you from being the only one to do the dishes !).
One idea is to write a rules document that each housemate can sign and keep. That way, if a dispute arises, you have a hand in hand – reminding a housemate who breaks the rules of their obligation to you.
If a document seems too formal, a pre-move-in conversation can achieve the same goals.
Mutual respect will go a long way to ensuring a healthy shared living environment. Remember that respect is a two-way street – be mindful of how you treat your housemates, their space, and their belongings.
Pool your resources
If you have the opportunity to connect with a roommate before you move in, contact them and discuss how you can pool resources and split expenses.
Even freshmen can benefit from this trick, as most colleges help new roommates exchange contact information before school starts. Coordinate and avoid duplicate efforts – no one wants to live in a room with two mini fridges but no coffee maker!
If you have a monthly subscription to a streaming service, consider splitting the cost with a roommate, friend, or relative. Every bit of money saved will help in the long run.
Create an emergency fund
A good best practice, whatever your situation, is to establish an emergency fund. Such a fund can be a safety net if an unexpected expense arises.
An emergency fund should be separate from the checking or debit accounts you use to cover day-to-day expenses. Consider an automatic deposit into your emergency account each month so you have something to draw on if you need it.
If you set up an emergency fund in an account that pays compound interest, the money you put aside could grow over time without you having to touch it. For example, if you put $500 from a summer job into an investment account that earns 7% per year, that account can grow to $700 in five years. In 20 years, that $500 could be $2,000 without you doing anything. Investing early will make growth more likely.
Traditional savings accounts are another great option for an emergency fund – but it’s worth noting that these accounts typically offer a much lower rate of return compared to investment accounts. However, they are less complicated to set up and use than investment accounts, so they provide additional flexibility. You can think of a savings account a bit like a piggy bank – something you can put something in and use it when you need it.
If you need more money
If sharing space and expenses with a roommate still leaves you strapped for cash, don’t worry. There are steps you can take to increase your income or manage your money better.
Consider a part-time job first. Taking a few coffee shop shifts can help you get the income you need to match your college lifestyle. If a job is not on the cards, consider borrowing money from a relative or other trusted person.
Additionally, private student loans can help cover college costs if scholarships, grants, and savings aren’t enough.
Finally, several financial institutions offer free credit consultations that can help you take stock of your situation. If you think you could benefit from financial coaching, contact a financial specialist.
Note: Financial Corner is a direct response to student requests for more information on managing financial matters. Advice is provided by Kristi Cutts, Manager of the UW Oshkosh Branch of UW Credit Union.