Going to college not only means leaving home for new classes and new friends, but most students are handling large sums of money for the first time in their lives. Thousands of dollars from school scholarships, grants, and student loans must be prudently allocated towards tuition costs, living expenses, and savings. To start your financial future off on the right foot, here are a few tips.
Get a Free Student Checking Account
Fortunately, many banks cater to college students. They encourage student accounts by offering free checking accounts without monthly fees and low minimum balances. Many colleges also have a college credit union on campus, which can be a great (not to mention convenient) option. Utilizing the online banking features of a checking account allows undergrads to keep track of bills and stay on target with monthly budgets.
Create a Budget
College students have to be savvy with their money. Most are living on tight budgets trying to balance school with a social life. Undergrads (and grad students) have to look at the big picture regarding their finances, which can be challenging when you're first starting out. The first step to proactively managing money is to create a realistic budget of funds and expenses. Those student loans and scholarships may seem like a lot of money at first, but dorm fees and living expenses can deplete them quickly. Making a simple spreadsheet or online tool of living costs are two easy ways to keep track of spending. Practicing the basics of personal finance in college now will help avoid money headaches in the future.
Direct Deposit Paychecks
College kids often work part time jobs, and it can be tempting to spend the cash right away. If your employer offers it, have your paychecks direct deposited to resist the temptation to impulse spend. In more traditional student jobs like waiting tables or working at a coffeehouse where earnings are typically paid in cash, you must exercise a little more discipline to deposit your earnings when you receive them.
Avoid Credit Cards
Students have to be very careful because credit card companies try to ensnare them in debt early. It's even harder because few young adults realize the impact credit card debt will have on them later in life. While rules now limit how credit card companies can market to kids on campus, remember that anything you purchase now will have to be paid off later. Except for emergencies, don't use credit cards in college. And no, a new pair of shoes or sunglasses do not count as an "emergency" expense. Just think of how much that interest will cost you down the road to avoid making impulse purchases.