In our last entry, we identified that being a college student can be hard on the wallet. Let’s continue our conversation on ways to keep you financially fit while in college.
Reduce Spending: Avoid Budget Busters
- Do you shop at large discount stores? Have you joined a food co op or regularly clip coupons?
- Stock up on snack foods, toiletries and office supplies before you get to campus or make one of your first shopping trips to the local Wal-Mart or Costco.
- Avoid impulse spending and purchasing big ticket items right away.
- Split costs with your roommate and keep your cash in the bank.
- Use a debit card for withdrawals and have a checking account to pay bills.
- Make sure your bank has a local ATM to avoid those withdrawal fees when you use banks outside of your network.
- Don’t spend extra money paying for money orders.
- Most banks will have lots of free offers. Take advantage of the free checking and pass on the credit card.
Avoid Credit Cards
Every bank and credit card company will want to give you a card.
If possible, try not to get sucked in. If you want to establish credit, do your research. What are the annual fees and what is the interest rate? Under what conditions does the rate change?
If you have a card, make it a practice to pay more than the minimum.
Make a plan to pay off your card early by budgeting your payments accordingly. Beware of “teaser” rates, balance transfers, payment holidays, or claims for no payment for some period of time. Anything advertised as free usually isn’t.
Request a copy of your credit rating to know where you stand and regularly monitor for identity theft.
Keep good records and pay your bills on time.
Develop Healthy Spending Habits
Living on your own and controlling your own money can be exciting and scary.
• What kind of spender are you?
• Do you shop on impulse?
• Do you comparison shop, waiting for the best deal?
• Are you generous, treating friends and roommates?
• What is your policy on lending money to friends?
Lending money is a tricky situation and even amongst good friends, can be problematic. Many friendships and credit ratings are destroyed over loans made in the spirit of friendship. Waiting for someone to pay you back or make a charge payment can get you in trouble really quickly.
My policy is not to lend unless I am willing to give it as a gift and not get repaid.
The spending habits you develop now will follow you throughout your adult life. Actually, this is the one time in your life that being broke is okay. Most people don’t expect college students to have a lot of money, so living on a budget is ok.
What you don’t want is to be living like a college student when you’re 40!
Doing without, delaying gratification while you’re in school can pay off later when it really matters.
Save, Save, Save
Get into the practice of saving.
If you have some regular income coming in from employment, discipline yourself by putting away some portion and not touching it during the month. Try to stick to it and you’ll be surprised what you can save.
You are also saving when you can reduce your expenses and put that savings in the bank.
Look for Internships
Did you know that there are many scholarships, internships and work study opportunities that can save you money on tuition, room and board, provide summer employment and introduce you to your first fulltime employer?
Don’t wait until senior year to look. Many companies look for summer analysts or interns to work in their junior year and come back after graduation. Network with students, professors and alumni. Find a mentor to help you make the transition from college life to the work world.
Keep your Eye on the Future
Remember what you’re in school for.
You have some long term goals you want to achieve so don’t let short term decisions throw you off track.
• Maybe you want to buy your own home, a nice car, or a vacation home.
• Maybe you want to travel or start your own business.
• Maybe you want to marry and start a family.
• Maybe you already have a family to care for.
How much you are willing to pay for college is up to you as is the amount of debt you are willing to take on. But…do you expect to be paying these bills 20 years from now? Also consider how undergraduate debt will impact on your ability to pay for graduate school or professional school?
Always look at the bigger picture to help you plan and stay on track.
And Remember: Be SMART About Money
• Save
• Manage spending
• Avoid credit cards
• Reduce debt
• Take care of your credit rating
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