Understanding the Cost of Your Financial Choices: College Edition

Opportunity cost is what you give up when you choose one option over another. For students, this might mean skipping a shift at work to hang out with friends, costing not just that day’s pay, but also the chance to build savings or gain experience. Or it could be spending $10 a day on coffee instead of investing that money in a savings account.

It’s not about guilt, it’s about awareness. Once students understand the trade-offs, they start making more intentional choices.

Currently, financial trade-offs are more visible than ever. Back-to-school season is the perfect time to start conversations about the money habits that build wealth early.

So how can students learn to weigh their options?

• Visualize the trade-off: Use apps or journals to track spending and what you’re giving up.
• Set micro-goals: Saving $5 a week might not sound like much, but it adds up and builds confidence.
• Talk it out: Financial counselors or mentors can help students think through decisions without judgment.

During PenAir Credit Union financial literacy workshop at the University of West Florida, a student-athlete shared her daily Starbucks habit was costing her over $1,000 a year. That’s money that could have gone toward textbooks or a spring break trip.

These “aha” moments help students make the connection to their real lives.

While the use of credit cards among college students isn’t anything new, the current inflation rates and economy are fueling concerns around the debt they’ll face after graduation.

According to PenAir’s community education development specialist, Casey Brueske, students should understand how their current decisions can have lasting impacts.

“You want to make sure you’re making sound decisions now, because your credit score is very important,” said Brueske.

As students start to develop their credit score, today’s choices can set the tone for future plans and purchases like rentals, car insurance, loan applications, etc.

One of the most powerful tools students can learn about is compound interest. A simple way to explain it: “It’s like planting a money tree. The earlier you plant it, the more it grows.”

Here’s a quick example:

Save $25 a month starting at age 16. With 5% interest compounded annually, you’ll have over $6,000 by the time you’re 26.

Wait until age 21 to start? You’ll have less than half that by 26.

Brueske reminds parents good financial choices start with healthy money habits.

“Having a plan for your student’s finances is great, but it may not work out as planned. Having those healthy habits in place can help guide your student’s choices and it will stay with them,” Brueske said.

Brueske adds “it’s never too late to start changing habits or putting aside money and create a savings plan. Students can pick a number they feel comfortable with and apply that percentage toward any amount of money (stipend, paycheck, etc.) coming into their hands. They can use automatic savings features or manually separate it. Once they get into the consistent habit, it will become routine, benefiting them long into adulthood.”

Whether it’s choosing to save instead of spending; or work instead of scrolling; every decision adds up. And the earlier students learn to spot opportunity costs, the better equipped they’ll be to build a future that fits.