There’s a lot to learn as a college student, and not all of it will come from textbooks and lectures. One of the most important areas of learning that is not often part of the standard coursework is personal finance. Learning to manage money during the college years can prevent mistakes that will take years to pay off and help to avoid the financial struggle many students experience during the school years. Here’s 5 ways to be money smart as a college student:
- Don’t borrow more than you need to. Whether applying for private student loans or federal, don’t try to borrow beyond what you need to pay for tuition, textbooks, and other school related essentials. While the extra money may be convenient, it comes at a price - interest - and that interest adds up quick and significantly increases your debt. When it comes time to pay back that borrowed money, you’ll appreciate your restraint.
- Avoid the credit card trap. Read the terms of some of the credit cards that you are eligible for as a student without an established credit history or with a credit score that has already taken a couple hits from youthful mistakes. The interest on a balance that is carried can be shockingly high. If it isn’t immediately, just wait ‘till that introductory period is over. You’d be far better off to keep a card for financial emergencies only, and save up for non-essential purchases.
- Earn some money. Even if a part-time, show up at regular hours, time clock sort of job isn’t practical with your class schedule, you can still devote a few hours a week to making some money. Freelance writing is just one of many options for work that can be done on-line from your dorm room on a flexible time schedule. Having some cash flow is always a good thing.
- Make a budget and use it. Call it a spending plan if the word budget seems too restrictive. The important thing is to plan your spending so that you are living within your means, rather than adding to your after college debt burden. A smart spending plan that manages to include adding even just a little bit into savings can help avoid the type of financial emergencies that require a credit card and double digit interest to manage.
- Learn how to get the most out of every dollar you spend. A little time invested in shopping well can save a significant sum of money. Important shopping skills include comparison shopping - don’t buy without checking prices elsewhere - and using unit price information in grocery stores. Sales pages can help you to get great bargains on all sorts of goods, from food to computer equipment. Don’t let gotta have it now impatience make you spend more than you need to. Take the time to shop well.
Developing good money management skills early is something that you’ll appreciate throughout your entire life. Your college years will be less stressful and when the student loans come due, you’ll be prepared. As you move forward in your life and career, these skills will serve you well, helping to ensure that you will be able to get the credit you need, such auto financing, a home mortgage, or a business loan.