Going off to college is an exciting time for any young person, but it comes with its own set of unique challenges. Not only do incoming freshman have to decide on the courses that they’ll take, get to know their new roommate, and navigate the ins and outs of campus life, but for many it’s the first time they’ll be responsible for their own finances.
Unfortunately, a course in personal finance isn’t always offered in high school or college, so most young people have to take matters into their own hands. Add to that the tricky waters of financial aid and student loans and it can seem like too much for such a young person.
However, there are many ways to prepare oneself to tackle these issues confidently and to ensure that smart and careful financial decisions become a part of everyday life. If you’re going off to college soon or know someone who is, take a look at some of these great ways to handle money better and smarter while earning that degree.
Be Extra Careful With Credit Cards
In the past credit card companies would routinely set up tables at college orientations and lure new students with free trinkets and seemingly free money. Recent government interventions have curtailed a lot of this, but credit card companies still pander to college students in a big way. For some students, this lure can prove to be irresistible.
This is not to say that credit cards are not useful, but they’re not always necessary. Additionally, for someone who doesn’t fully understand how credit cards work it can lead to significant debt. If you need a credit card, shop around for one that has a good interest rate and one without a sky high limit. Also be sure to only use it when it’s absolutely necessary and pay off the balance in full every month.
Open a Student Checking Account
Most banks, especially those in college towns, offer special checking accounts for students. These often don’t require a minimum balance and sometimes offer other perks. Having a checking account is a great way to learn how to manage your money, but there will be a learning curve.
Be sure that you understand the penalties for overdraft fees and the other risks that come with being overdrawn on your account. One way to make sure that you have an eye on your money is to use paper checks instead of a debit card whenever possible. While it might seem antiquated, maintaining an actual checkbook can offer you greater insight into where your money goes than a debit card can. Also, you can use sites like Buy-Cheap-Checks.com to find some cool styles and colors, allowing for some enjoyment while you use a check.
Create a Budget and Stick to It
Creating a budget and sticking to it are two of the most important things that you can do in your life, so why not start as early as possible. If you can be realistic about the things you want versus the things you need, and decide in advance how much money you have for those things, you will be in a much better place than most of your fellow students.
At the beginning of each month determine how much money you will have coming in and decide how that money would be best spent. Pay necessary bills like car insurance and rent first then work your way down the money ladder. Internet, electricity, food, and gasoline should be budgeted for next, then take another look at your balance. It’s wise to keep some money on hand each month for an emergency, and you can set this aside after all the bills have been paid.
Now comes the fun part. Do you really need those concert tickets or that new pair of shoes? While you might have the money to pay for those things, what happens if something unexpected arises and you find yourself broke? Being able to distinguish between wants and needs will not only save you money in the short term, it can leave you better prepared for many of life’s decisions later on down the road.
No one ever said that being an adult was easy, but if you learn to manage your money while you’re still in college you will find that you’ll have it much, much easier. Avoid credit cards, use your checking account wisely, and create a realistic budget for yourself. Once you have those things down you might find that it’ll be that much easier once you graduate
Photo courtesy of: COD Newsroom