5 Personal Finance Rules College Students Cannot Afford to Break
Hollywood portrays college life as a carefree experience where you can meet your soulmate and party any time you want to. Reality, however, isn’t like that. Many students are living away from home for the first time and have difficulty making ends meet. To help you with that, we’ve made a list of five simple rules to manage your personal finances while in college.
Since we’re talking about college, we have a homework assignment for you before you review this list. Research the topic “snowball vs avalanche.” No, they are not competitive events at the X Games. Snowball and avalanche are debt payoff methods. Understanding debt now (and how difficult it can be to pay off) before you start accumulating it will help you significantly in the future.
When your assignment is complete, read up on the finance rules you can’t afford to break…
1. Fill Out Your FAFSA
The Free Application for Federal Student Aid (FAFSA) is a form that every college student should fill out, regardless of whether you think you’re eligible for assistance. It starts the ball rolling with the financial aid department at your school and might produce some surprising resources to help you pay for your education. Refusing to do it could be turning down free money.
2. Open a Checking and Savings Account
Pull out a twenty-dollar bill and use it to open a checking and savings account. Most banks and credit unions offer “no minimum balance” options, so you can open each account with ten bucks in each. If you can’t find a traditional institution to do that, try doing business with an online bank. The point is to start the accounts so you can eventually add more money to them.
3. Get a Job to Earn Extra Cash
Coffee shops and cafes are cool places to work when you’re in school. Get a part-time job and put some extra cash in your pocket. Call it beer money if you like. You’re not out to get rich while you’re still in school, but you should learn to support yourself. If you’re really ambitious, try to find a job in the field you’re going to school for.
4. Limit Yourself to One Credit Card
Pre-approved credit card offers are a trap. The companies that issue them know that college students spend freely when they get their first card. Try to avoid that mistake and limit yourself to keeping just one credit card while you’re in school. Learn how to manage that properly and you won’t need another. Try to pay cash whenever possible or use your debit card.
5. Start Saving for Retirement
This probably sounds crazy if you’re eighteen or nineteen years old and just going into your freshman year. It’s not. Just ask any older adult if they wish they started their retirement savings sooner. Open an IRA now and start putting some money away. Starting early means you can retire early or retire on time with substantial money in the bank.
The Bottom Line: Use College to Prepare for Real Life
Each of these suggestions is an introduction to behaviors you’ll need to adopt once you enter the real world after college. We all need bank accounts and credit cards, jobs to support ourselves, and a plan for retirement. Learning how to do these things while you’re still in school will prepare you for what’s coming later.
Sources:
https://www.debt.org/students/financial-tips-college-students/
