August is an exciting time for freshmen students. From choosing classes to deciding what fraternity or sorority to join to decking out dorm rooms, there are so many decisions to make as students settle into college life.
However, one glaring omission from the college curriculum is a financial literacy class. It’s hard to comprehend that algebra is more important than understanding your finances. One you need every single day, the other you will probably never use once you graduate! In light of this, we want to help students understand how they can take control of their finances and adopt habits that set them up for success. Here are eight tips for students.
1. Set a budget:
This is probably the first time you’ve lived away from home and you are about to find out first-hand how expensive life is. Before heading off, you should look at all the costs you know you will incur and then set a budget for the key buckets such as food, books, rent, and socializing and then try to stick to that budget. If you put in place a budget and follow it, you will eat more than ramen noodles during term time! In addition, if you have a budget, you can then make better decisions around if you really can afford or need that additional college sweatshirt!
2. Sniff out every student discount:
College towns have an array of discounts for students along with many national brands. It pays to find out who offers discounts from food to clothing to haircuts as this will help your money go further. These types of savvy habits will continue to serve you well after graduation.
3. Start building your credit:
Your credit score reflects how likely you are to pay loans or bills promptly and the higher your score, the better. Credit scores don’t affect Federal student loans, but it does determine your interest rate with private loans, so it makes sense to start building up your rating. If you graduate with a good credit score, it helps when you want to finance a car or get approved for your first apartment.
4. Credit cards, proceed with caution:
Going to college is usually when most people get their first credit card and it’s a good way to start building your credit rating. However, a staggering 55 percent of Americans fail to pay their monthly balance. And this is how credit card companies make their money, with interest rates on unpaid balances hovering around 18%! And if you’re following a budget, then do you really need a credit card?
5. Establish an emergency fund:
Rather than relying on a credit card, try and create a fund to help you deal with any curveballs thrown your way. If relatives send you a holiday gift, ask for a donation to your emergency fund instead.
6. Remember your student loans:
Think carefully about what you use these loans for beyond tuition, as you need to pay every cent back plus the interest! It’s good to understand more about loan terminology as it will help with borrowing choices now and the repayment process down the road. Debt creates a lot of stress so try to minimize the loans you take on.7. Don’t be afraid to move banks: Shop around for a bank that fits your new life. Evaluate all of the different products and look for an account tailored to your college life with no monthly maintenance fee. This is also a great way to secure a free overdraft facility.8. Apps are your BFF: It’s hard to imagine life without your smartphone and when it comes to your finances, multiple apps can help you manage your money. For iPhone users, Banktivity is perfect for your needs. However, rather than accepting our word (we might be biased!), take it for a free trial and see how easy it is.
College life is not just about getting your degree; you need to educate yourself on managing your finances. This will help you realize all of your hopes and dreams.