Are you a college student looking to make the most of your finances? From managing leftover financial aid money to building credit, there are several strategies you can employ to adapt to your new life away from home. We’ve spoken to experts in the field to compile the four top financial literacy tips for students like you.
1. Get the Right Savings and Checking Accounts
Establishing reliable savings and checking accounts is crucial when entering college. To find the best fit for your needs, consider three factors: accessibility, low fees, and other benefits.
Accessibility:
One of the first things to consider when choosing a bank is the accessibility of its ATMs. Make sure that there are ATMs conveniently located on or near your campus. This will help you avoid additional charges that can quickly add up over time.
Repetitive ATM use from other banks can lead to budgeting problems, overdrafts, and foreign ATM fees. By selecting a bank with easily accessible ATMs, you can save money and simplify your financial transactions.
Low Fees:
Another important aspect to consider when selecting a savings or checking account is the fees associated with it. Look for an account with no monthly fees to avoid unnecessary expenses. By doing so, you can keep more of your hard-earned money and allocate it towards other essential expenses.
Remember, it’s important to be aware of how much money is coming in and going out. By avoiding monthly fees, you can have a clearer picture of your financial situation and make more informed decisions.
Other Benefits:
In addition to accessibility and low fees, it’s worth exploring other benefits that different banks offer. Some banks provide perks like free financial education resources, cashback rewards, or higher interest rates on savings accounts.
Consider what benefits are important to you and align with your financial goals. For example, if you receive a refund from borrowed student loan money, you can deposit it into an interest-producing account for it to grow over time. This way, you can withdraw only what is necessary for educational expenses and potentially earn some extra money through interest.
2. Make a Budget and Set Financial Goals
Before your classes begin, create monthly budgets for the semester, which should include all expenses such as textbooks and social events. This proactive approach will help you stay on top of your finances and avoid any last-minute surprises. Start by estimating your income for the month, whether it’s from your part-time job, financial aid, or any other source. Then, list all your expenses, including rent, utilities, groceries, transportation, textbooks, and any social activities you plan to engage in.
After creating a monthly budget, it’s important to maintain a broader school year budget as well. This will give you a better understanding of your financial situation and help you plan for long-term expenses. Regularly review your income and expenditures to ensure you have enough to cover basic living costs. Start with a limited budget and actively plan, track, and review your expenses throughout the month. Keep in mind that unexpected expenses may arise, so it’s essential to allocate a portion of your budget for emergencies.
In addition to creating budgets, take advantage of free financial literacy programs and workshops offered by your university. These resources can provide you with valuable knowledge and practical skills to effectively manage your money. Seek support from your campus’s student money management center as well. They can offer personalized guidance and assistance in developing effective money management strategies. They can help you understand concepts like budgeting, saving, and investing, and provide you with tips on minimizing debt and maximizing your financial resources.
By incorporating these strategies into your financial planning, you will be well-equipped to handle the financial challenges of college life and develop lifelong money management skills.
3. Be Strategic About Building Your Credit
Building credit early on is essential for your future financial endeavors. Having a good credit history can open doors to opportunities such as getting approved for loans, renting an apartment, or even finding employment. Whether through credit cards or student loans, there are several ways to establish credit. Let’s explore these options in more detail:
Credit Cards:
One way to build credit is by obtaining a credit card. When selecting a credit card, it’s important to consider a few key factors. Look for a card that offers rewards such as cash back, low-interest rates, or travel miles. These rewards can provide you with additional benefits while you build your credit.
However, it’s crucial to use your credit card responsibly to avoid unnecessary debt. Make sure to pay off the full balance on time every month to demonstrate responsible credit management. This will not only establish a positive payment history but also prevent you from accumulating interest charges. By consistently practicing responsible credit card usage, you can gradually build a strong credit score.
Student Loans:
Another way to establish credit is through student loans. Many students rely on student loans to finance their education. When borrowing, it’s important to do so responsibly to ensure a positive impact on your credit score. One key aspect to consider is maintaining a low debt-to-income ratio. This ratio compares your monthly debt payments to your monthly income. By keeping your debt levels manageable and ensuring that your income comfortably covers your debt obligations, you can demonstrate responsible borrowing behavior. This will reflect positively on your credit score and help you build a solid credit history.
Additionally, it’s crucial to make payments on time for all your student loans. Late payments can have a negative impact on your credit score and may hinder your ability to access credit in the future. Take advantage of automatic payment options or set up reminders to ensure timely payments. By consistently paying your student loans as agreed, you will establish a positive payment history, which is an essential factor in building credit.
Remember, building credit takes time and patience. It’s important to start early and practice responsible financial habits. By selecting a credit card with benefits, using it responsibly, and managing your student loans effectively, you can lay a strong foundation for a positive credit history, setting yourself up for future financial success.
4. Cultivate Money-Saving Habits
Your student ID is more than just a form of identification. It possesses the power to unlock a wide array of benefits and discounts that can significantly stretch your budget. By taking advantage of these perks, you can make your hard-earned money go even further. Here are some strategies to help you maximize the potential of your student ID:
1. Explore Local and National Retailers and Restaurants:
Many businesses, both local and national, offer special discounts exclusively for students. From clothing stores to restaurants to entertainment venues, you’ll find a plethora of options.
Take the time to research and identify the establishments that provide student discounts in your area. This way, you can enjoy savings on everyday purchases and indulge in occasional treats without breaking the bank.
2. Stay Updated on Low-Cost or Free Campus Events:
Colleges and universities often organize a wide range of events, including concerts, lectures, workshops, and cultural exhibitions. Many of these events are low-cost or even free for students.
Stay connected with your campus community and regularly check for event updates. Attending these events not only helps you save money on entertainment expenses but also allows you to engage with your fellow students and make the most of your college experience.
3. Consider Your Purchases Mindfully:
Before making any purchase, it’s essential to pause and evaluate whether it is something you truly need. Impulse buying can quickly drain your finances. Instead, cultivate mindful spending habits by carefully considering each purchase. Ask yourself if the item or experience aligns with your priorities and values.
By making deliberate and thoughtful purchasing decisions, you can avoid unnecessary expenses and allocate your resources towards things that truly matter to you.
4. Take Advantage of Student Resources:
Colleges and universities often provide various resources and services aimed at supporting student financial well-being. These may include free or discounted access to fitness facilities, health services, counseling, and academic support.
By utilizing these resources, you can save money on essential services and improve your overall well-being. Take the time to familiarize yourself with the student resources available on your campus and make the most of them.
Also read: How to Manage Your Finances in College: A Comprehensive Guide
Conclusion
By implementing these financial literacy tips, you can take control of your finances and navigate your college years with confidence. Remember, managing your money effectively now will set you up for a successful financial future.
