Managing finances can be difficult when you are just leaving home and heading off to college for the first time. Setting budgets, managing your finances, getting and keeping some credit cards in good standing, student loans can be quite the challenge. Creating a smart fiscal plan now will set you off on the right path in life. With the freedom of living on your own and heading to college comes responsibility.
Good financial responsibility starts with creating a budget, one you can live with. You do not have to earn a lot of money to have the need to budget. Poor budgeting is one of the leading causes of debt among college students outside of their student loans. Your income sources are likely to be from a job, student loans and possibly from your parents. Start out by writing out your expenses which may include:
Gas / transportation
Going out & Entertainment ( It’s college right?)
Food & Dining
Spring break savings if you plan to do spring break
Incidentals & hygiene items
Now add this all up and compare it to your income. If you fall short when comparing expenses to income, decide what is the most important to you, and what you can go without or cut down on expenses. Know where you stand every week with your budget, and keep an eye on your debit and credit balances to avoid trouble later down the line. With any budget make sure to set some aside in savings, even if only $50.00 a month. Be conservative with your ATM use, and keep track of your balance and your budget once your budget is in place. If you need help with setting up fiscally sound a budget, there are apps out there that can help you for your smartphone. Mint.com offers an app that you can see all your accounts in one place, as well as See all your balances and transactions together in one place, either on the web or your smart phone. Worried about losing track of bills? Mint has a bill reminder feature that will send automatic alerts to you. Another app that is popular is www.youneedabudget.com, which will help you plan, run and maintain a budget. They even offer free live classes in the form of a 9 day course, although the app itself has a cost of $60.00 its well worth it, and they even have a 34 day full featured demo of the app. This app has changed thousands of lives and helped thousands stay out of debt. One other thing with budgets, you can often times save money by doing such things as buying used text books for school for example and stretch your budget out. One last word on budgets, you don’t need to spend it all, you can always set some aside that is left over for use in the coming months ahead.
It may be time to consider your credit and your credit future, and when it comes to credit, your credit score is your grade. If you are just starting out with credit there are a few cards for people with little to no credit, and there is also secured credit cards. Part two of this series will focus on credit card offers for college students with little to no credit history. The important thing to understand with credit cards is that it is not free money, the interest can be steep, but you will only get charged interest if you fail to pay the balance off before the due date of your statement. Credit cards when used responsibility can be a great short term loan, especially if you avoid the interest by paying the bill off in full when the statement is due.
Later in life you will need credit, weather it’s for an auto loan, a mortgage, or a personal loan. The better your credit score or rating is, the lower interest you will pay, as the bank or lender will see you as less of a risk, and view you as a responsible person. When it comes to credit having no credit history is actually worse than having bad credit so now is the time to slowly start building your credit rating up for your future. Your credit rating starts with your first loan or credit card, and to build your credit rating up you need to make your payments on time, every time, and in full every month. Failure to maintain good credit can cost you for years.
Other financial advice for college students is to look into joining a credit union for savings and checking accounts, as credit unions tend to pay higher interest than standard banks do. Online banks are also a good avenue. To save money on entertainment, make ample use of campus entertainment events, college is full of free events that you never have to spend a dime on. Lastly learn to invest now, even if only $100.00 here and there. If you can learn to invest $1200.00 a year for the next ten years you will be setting yourself up for success in life.