Many high school students work either summer or part time jobs before heading off to college, but very few pre-college students have a firm grasp of money or how to manage their finances. While learning all of this is a part of what college is for, it can be helpful to know what you’re getting into ahead of time in order to best prepare yourself for a successful future.
If you’re a parent whose child is about to head off to University, these are great things for you to discuss with them before you drop them off in August. If you want to start college off right, these skills are vital for the financial success of any college student; mastering them can help you avoid the pitfalls that many post-grads encounter.
Learn To Create A Budget
Budgeting is essentially spending less than you earn in an effort to build savings and maintain your financial health, a concept that young adults are usually not familiar with. While many college students may have income from a part time or summer job they worked in high school, many others rely heavily on their parents for financial assistance during college. Creating a budget for essentials and discretionary expenses can teach you to be responsible with your finances from the beginning.
A budget helps prevent you from overspending and racking up debt by allowing you to see where you’re spending your money and where you can make cuts if necessary. You may have been fortunate enough to have your parents usually pay for things like going to the movies or going out to eat, but in college you’ll be responsible for managing all of your day to day expenses.
While there still may be some financial assistance coming from your parents while in college, after you graduate you’ll eventually have to start making it on your own. Mastering a budget early will give you the tools you need to make that transition as smooth as possible.
Be Careful With Credit
The temptation of seeing credit as “free money” is something that’s incredibly alluring to any college student. Credit card companies know this and send representatives to colleges to recruit students. The best time to get a credit card is when you have enough of a steady income that you’re qualified for a card with a good rate and no fee, but if you’re looking to build credit you can do so by taking out a credit card and making regular payments on it. Building credit from an early age can be beneficial when it comes time to do things like take out a mortgage or apply for a loan, but it can be dangerous if you abuse it.
If you do get a credit card, be careful about paying it off in full every month. Paying only the minimum will result in interest charges that can easily stack up, and paying late will result in hits to your credit that will damage your ability to use credit in the future. If you’re judicious about credit it can be great financial tool, but if you don’t think you can manage it then hold off until you can.
Know Everything You Can About Student Loans
Whether you take out student loans yourself or with your parents, you need to fully understand what you’re getting yourself into. Know exactly how much you have to spend and when you will eventually have to pay it back. If you know for certain you’re heading into a high paying career right after college, you can afford to take out loans with higher monthly repayments. But if you’re going to graduate school or unsure yet of what you’re looking to do post-college, you may want to spread out your repayments into something much more manageable.
With few exceptions, federal student loans are by far a better choice than private student loans. They offer lower interest rates and more flexible repayment plans with options like forbearance and deferments for students with financial difficulty. Look into any scholarships and grants that you may be eligible for as well, as free money may be available to those with great academic achievement or financial need.
Now Is The Time To Start Being Frugal
College is a massive expense and every penny you can save helps reduce the burden of student loans. It’s never too early to adopt a frugal mindset with your expenses, even if you’re still relying solely on your parents for financial assistance. Being responsible with your money is something you have to learn and it’s a tool that will serve you well into adulthood. If you learn now how to reign in spending then curbing your impulses later will be that much easier.
Also consider the cost of the classes you’re taking. If you can receive college credit doing things like an independent study or even from AP classes you took in high school, use that to save money on classes. You need a certain number of credits to graduate, but the key to achieving that in a frugal way is by taking the most essential classes for what you want to do and being judicious about any elective courses you take.
Maximize Your Time
If you worked a part time job in high school then you know it is absolutely possible to attend class and work at the same time. Many colleges offer part time work to their students in the dining hall or gym. Picking up a shift or two a week swiping people into your University dining hall can be an easy way to supplement your income while in college.
While you absolutely want to take advantage of the full college experience, you can still make things easier for yourself by taking advantage of the time you have left over. By the time graduation comes around, you’ll be grateful for anything that helped reduce the financial burden that higher learning entails.