It’s that time of year again: back to school. For millions of Americans, that means students are headed off to college, many for the first time. While these students may be enjoying newfound freedom, it’s important to remember that that freedom also comes with new responsibility to manage one’s own finances. Here are a few financial tips to get college freshmen started on the right foot.
Open a checking account. Whether working during school or receiving an allowance from parents, a checking account gives students the flexibility to easily access the money they need for expenses.
Create a budget. Determine the amount of money coming in from all sources: parents, scholarships, loans, etc. Then estimate the expenses that will be incurred: school supplies, books, meal plans, etc. Knowing how much you have or don’t have to spend can help prevent you from needlessly going into debt.
Establish credit. This doesn’t mean going into debt or spending money you don’t have. Length of credit history is an important factor in your credit score, so it’s important to start sooner rather than later. One recommendation is to set up an account for something you buy regularly, such as gasoline, with a low credit line to avoid the temptation to overspend.
Stay organized. Set up recurring reminders to review your income and expenses and to pay your bills in advance of their due date. Spend a little extra time looking for a better deal on textbooks or tracking down coupons for items you need. A little extra prep work can keep you on top of your finances and possibly save you some money as well.
Make a plan for student loan debt. At the beginning of one’s college journey, it’s hard to envision life after college. However, many students will graduate saddled with student loan debt, so it’s important to be proactive and plan ahead. Figure out how much debt you will have by the time you graduate, be mindful of how much you borrow, and consider starting to repay the debt before you’re required to. Know the details of each loan you have, how much you borrowed, and your interest rates. Figure out what your monthly payments will be and what repayment options you have available.
For new college freshmen, it can be difficult to focus on the responsibility of managing one’s money with all the newfound freedom that college offers. However, taking a few steps to set yourself up for success in terms of money management can enable financial freedom in college and beyond.