College students need to handle debt, credit cards wisely

— -- In tough economic times, success in college often depends as much on money smarts as book smarts. Risky financial behaviors, such as paying bills late or paying less than the minimum due, maxing out credit cards or taking out payday loans, for example, can jeopardize a student's college career.

Students who exhibit one or more such risky behaviors say they're less likely to graduate than students who don't take on such risks, according to a University of Arizona study published earlier this year.

Poor money management spills over into other areas of students' lives, too, say researchers Joyce Serido and Soyeon Shim, who surveyed more than 2,000 freshmen at the university. Money problems can strain relationships with family and friends and negatively affect students' health and psychological well-being.

Students heading to college for the first time in the next few weeks can start immediately to keep their finances fit. Knowing how much you need to pay for helps, says Kristy Vienne, director of the Student Money Management Center, a personal finance education resource for Sam Houston State University students. Some steps to take:

Keep your parents involved

Your parent or guardian should be in the loop, says Lynne Strang, spokeswoman for American Financial Services Association.

Figure out student expenses per month — from essentials such as laundry and food, to entertainment and clothes. Then determine whether parents will contribute to the cause. "Together, go through that list, and agree upon a set dollar amount," she says.

The family discussion sets clear financial limits and ground rules for who pays what. When the money's gone, "it's gone," Strang says. "You need to pace yourself."

Track your expenses

Students might think a cup of coffee every morning is not much. But $2 a day can add up to more than $700 a year.

Jinhee Kim, an associate professor teaching a personal and family finance course at the University of Maryland, tells students to record every purchase. "When students actually track those expenses, they realize how much they are spending on little items. And small things add up," she says.