Having to manage finances for the first time is one of the hardest things about being a college student. College students also find themselves in very different financial situations. Some have scholarships, some depend on their parents to pay for their college expenses, and many are accumulating student loan debt throughout their education with plans to pay it back later. There’s no one-size-fits-all way to manage finances as a college student, but in this article we’re speaking to the student who has their basic needs covered and wants to avoid some of the common financial traps and pitfalls that students will encounter for the first time in college.

Establish Financial Goals

The basic value proposition of college is that you’re spending your time getting an education so that you can earn more money in the labor market later on. In essence, you’re trading some time and some money for qualifications, education and experience that you can use later. Your financial goals should reflect the reality that this part of your life is about learning as much as possible, making connections, and finding out what you want to pursue after you graduate.

If your financial goal for college is to save money for a down payment on a house, that’s probably something you should be doing later in life. A great goal for most college students would be, “graduate with as little debt as possible, and with the best possible prospects for paying it off.”

Understand Wants vs Needs

Many college students end up in financial trouble because they fail to distinguish between needs and wants. You need to pay your rent every month and you need money for food, but things like partying and restaurant meals will eat into your budget. While you might want those things in the moment, it’s important to understand when to say no. Always budget for your needs first – identify the things that you can’t go  without and make sure they’re always covered. Some college students give themselves a cash allowance each week for “wants” – if they run out, they have to wait until next week to get what they want. For things you do need, try to get the best deal possible. Comparison shopping can help you save money on car insurance, reduce your phone bill, get a better price on a new laptop for school, etc.

Know Where Your Money is Going

Budgeting just means keeping track of your income and expenses so you can see what’s happening to your dollars. If you’re living off student loans, you probably receive a lump sum a couple of times a year and budget for a few months at a time. Keep track of how you’re spending your money and always make sure you have enough set aside for the most important things – rent, food, and bill payments that you can’t miss.

Avoid Peer Pressure

College campuses are vibrant and exciting, and it’s totally normal to want to fit in and have fun. The important thing is not to let your spending get out of control while you’re doing that. Avoiding the peer pressure you’ll face to go out and party every weekend is one of the best ways to graduate with less debt – instead, find friends that want to play sports together, study at the library, or join a book club. If you can’t resist the temptation to go out once in a while, set yourself a strict budget for the evening and stick to it.

Understand how Credit Cards Work

Many college students were never formally taught how credit cards work, yet vendors can be found on every college campus marketing credit cards to freshmen. While it’s important to build your credit at this time in your life, many college students end up in financial trouble because of abusing credit. Understand that credit isn’t free money – you’ll be charged interest on every purchase and you have to make the minimum payment every month to avoid going into default. Read the terms and conditions carefully before applying for your first card.

Invest in Yourself!

Along with getting an education that prepares you for a job in the future, learning to manage your finances responsibly as a college student is a skill that you can take with you through the rest of your life. Educating yourself in financial management is one of the best ways you can invest in your future – and that’s advice you can bank on.

Bijan Abdi is the President and CEO of Freedom National Insurance Services, a managing general agent based in CA. He has over 30 years of experience in preferred, standard, and non-standard auto insurance. His background includes experience in sales, underwriting, program design and maintenance, as well as managerial and executive duties.