You just can’t believe it. That baby that you used to feed baby food using the airplane method is putting on the cap and gown and receiving a high school diploma. In a few short months it is off to college half way across the country to start the next phase of life. Adulthood. Your college student is in many ways on their own. No more coming home from school with laundry done and dinner on the table. With this independence will come responsibility. You can preach “don’t spend every penny on boos and partying.” That may fall on deaf ears. You can also provide them with these 8 smart financial tips for college students.
1. Overanalyze all Financial Aid options. Take it from me. Paying for school really stinks. It is best to pay for school the smartest way possible. If you have to take out loans, pay attention to payment terms and interest rates. You are significantly better off with federal loans than private relative to interest rates. If you don’t feel up to the task of informing yourself, consider consulting a professional or using an online service. PARENTS SHOULD MONITOR THIS PROCESS CLOSELY. The key is researching the best possible ways to pay for school. One private loan for $30,000 is about $300 a month just for the minimum payment. And you will probably want to make more than the minimum payment once your paying the loans back. $300 dollars a month on an entry level salary will tie up a pretty big amount of your budget. Need I remind you $30,000 is about a years tuition at some schools. College is typically 2 to 4 years. In other words, school can get very expensive. And student loan interest makes it even worse. Be careful and be smart when considering options to pay.
2. Be a cheapskate. Look up the word frugal in the dictionary and adopt it as a new trait of your character. Conserve as much money as you can and be cheap whenever you can. I know this is not exactly what you want to hear. You want to hear “enjoy yourself. party it up. you only go to college once.” Now I’m not saying you have to go on a ramen noodle diet. All I am saying is take into consideration want vs. need. Do you need to buy your entire frat house a round at the bar? Probably not. Do you need to spend loan money on various gadgets? Again, Probably not. Conserve money where you can.
3. Take advantage of Student Discounts. So often the surroundings of college campuses have some great spots for grub, entertainment etc. Some of these establishments will offer discounts to students. Be sure to carry around your campus ID and frequent the places that offer you discounts for your business. Believe me the few nickels or dollars you save each visit will add up to a tremendous amount of money once the four years is over. Don’t be afraid to ask the establishment if they offer student discounts before you order that sandwich. Some places don’t advertise the student discount but still offer it if asked.
4. Get a credit card. What?! Bad Idea! Maxed out in no time and ruined credit. Not necessarily. Building credit does not necessarily mean using it in substantial amounts. Open a credit account and throw away the card. Use it only to charge your dollar shave club subscription or Netflix. Then set up automatic payments on your bank account to ensure on-time payment. This will help build your credit while a student in college. Over time your credit will improve and hopefully stay that way for many years to come. You will need credit to get cars and apartments and other expensive things you most likely won’t have the cash to pay for outright.
5. Look for savings on books. I’m taking 5 classes and just one of the textbooks is $250. Is this some kind of a sick joke? No it’s not. The new edition of brand new books can get steep. But savings shouldn’t be hard to find. Some professors won’t mind if you use old editions. Be careful doing that though. eBay, Amazon and other online entities can become your best friends here. That $250 book in the university bookstore may be $60 on Amazon.
6. Consider a part-time gig. Hours in the library. Papers. Quizzes. Tests. Exams. Various Campus Activities. Sports. And of course, Partying! When in the heck am I going to find for a job? Make time. Even if it is a day or two a week. The experience is good and being busy is also good. Consider a job that you get enjoyment out of. Maybe you like coffee. Think about taking a part-time position as a Barista at the campus coffee house. The extra cash will come in handy. Try to get a job that won’t add to your stress level either. Then in the latter years, consider internships that are relative to the field your going into.
7. Budget your money. If you have an online bank account, consider using mint.com. It’s a great free service that monitors your spending with pretty graphs and charts. It notifies you if your going overboard with one of your spending categories. So let’s say you have your monthly budget set to $40 dollars for coffee. When you go over that designated amount mint alerts you via email. It’s a great tool to budget your monthly expenses. They also have an app for all smart phones and tablets.
8. Save your money. It’s hard to save money. Especially in college when there is just so much to spend it on. But open a savings account and throw some money in there every once in a while. After a while you’ll have a nice chunk of change. Then when you graduate you’ll have a nice amount to start paying off loans and other debts. And if you’re really ahead of the game, you can consider investing some of it. Compounding interest is truly a beautiful thing my friends.
Following these financial tips for college students does not guarantee an A+ in Personal Finance 101 but it guarantees a passing grade. So start planning now because the summer will go quickly and before you know it you’ll be packing your stuff and heading off to college. Wish you all the best of luck. Work hard and do well. This way when you graduate, I can hire you. Until next time.