College is an exciting – and expensive – time in your life and the life of your teen. The average debt for seniors is high and students have quite the shock waiting for them upon graduation. The best way to handle future debt is to be smart about finances from the start of freshman year. Here are five tips every new college student should know about managing their money.
- Learn how to budget, if you don’t know how to already.
This is the time in your life when you need to make a little bit of money stretch pretty far. College students are out on their own for the first time, buying everything from gas and food to weekends partying with their friends. However, students aren’t earning a lot yet, not even if they work in their spare time. Knowing how much you make and what has to go toward bills and tuition is integral to supporting your lifestyle and saving yourself from extra debt down the road.
- Do not apply for extraneous credit cards, tempting as it may be.
A good habit to keep for your entire life is to never charge what you can’t pay for in cash. You can’t actually afford something if your only option is to pay for it with a credit card. When you do swipe for something that’s above your means, you’ll either need to pull from money from another necessity, work extra hard to make up the difference, or, worst of all, pay high interest fees.
- Do establish credit, though.
It’s a good idea to start building your credit history now so that you have it there when you do make more down the line. It’s fine to own a low interest credit card so long as you only use it for the things you’d pay for out of your bank account anyway. To keep yourself from overspending, setup a few recurring payments that you’d be paying for anyway, then cut it up so that you don’t automatically swipe it every time you treat yourself to something. Also setup auto-pay from your bank account to your credit card so that it’s paid in full every month. Don’t carry a balance and don’t max out the card, either. Pay it off completely every cycle and try to leave at least 30% of the limit free.
- Practice being frugal.
College is a time to have fun with friends and flex your independence. It’s not the time, though, to buy high ticket items and develop a taste for the finer things. One of the best things about college is living on a small budget and having a blast with your pals. Embrace this time in your life, when Ramen is your dinner most nights and you dress in mostly hand-me-downs from your older sibling. You don’t need fancy clothes, an expensive car or a ton of high-tech gadgets to enjoy college and get an education.
- Take advantage of student discounts.
There are probably some you don’t even know about yet. Usually, businesses that are near to colleges offer discounts for local students. You can get everything from pizza to school supplies for less just by flashing your student ID card. Plenty of national companies, including those online, will offer student discounts, too, so long as you show proof that you are in fact in school.
What students learn in their books is important, but real-life lessons, including those about money, are part of college too.
Jessica Kane is a professional blogger who focuses on personal finance and other money matters. She currently writes for Checkworks.com, a leading supplier of personal and business checks.