College student financial planning
Now that high school graduation is over, you can relax, right? Well, sure - for a little while. Senior year takes its toll on many students. You certainly need to unwind from the last few stressful months and find ways to refresh your mind, body, and spirit. But undoubtedly you're already getting excited about the next chapter in your life: going off to college. Even if you plan to live at home and attend a local or community college, there is still a major shift about to take place, particularly in your thinking.
From here on out, you are officially an adult and with this new identity comes new responsibilities. Perhaps you're one of those kids who have held a part-time job since you were 15. If so, you may already have a bank account and even write your own checks to pay for clothes or your cell phone bill.
Unfortunately, the vast majority of kids preparing for college are just starting to think about managing money on their own. Whether you are currently working and saving money for college or receiving money from your parents for support, now is the time to set a budget and plan your finances for the fall. College financial planning is almost as difficult as deciding what to take to college.
Establish a checking account
Imagine: in just a few short months you'll be faced with a new set of responsibilities in a completely foreign environment. Beyond getting to know your new roommates and classmates, you will experience a crash-course in how to navigate a busy campus and sign up for classes through the Registrar's office. And all that's even before classes start! So, while you're enjoying summer vacation, take a day to research some banking options.
Most of you are more computer savvy than your parents, so don't rely solely on them for assistance. Go online and see which banks are not only close to your home, but also have locations near your college. Some colleges even have banks available on campus. Find out who they are and what perks they offer when a new customer signs up.
Some banks, for example, will give you free checks or eliminate the monthly fee if you keep a minimum of $300 or more in your account at all times. Others offer a free microwave. That would certainly come in handy in your new dorm! Still others will deposit a small amount of cash directly in your account as a sign-on bonus. Find the best bank for you, order your checks, and also request a debit card. If the bank offers to put your picture on your card, do it! This will hinder identity theft.
Keep a Log
You'll want to keep a log of your categorized expenditures so that you will more effectively manage your finances. Whether you log it in your journal or set up a simple spreadsheet on your computer, you need to document how you will be spending your money in order to prioritize. Books, of course, will be a major expenditure. You also need to consider the categories of food, clothing, transportation, and entertainment. Know where your money is going so you can plan accordingly and make adjustments as necessary.
Decide on a banking method
The most convenient method for students is certainly online banking. This way, you won't need to keep a paper checkbook; instead, you can input checking info directly online as well as set up automatic bill pay for your car insurance and other regular payments you'll have. You will always have access to a snapshot of your finances and will easily be able to verify any debit charges made to your bank card.
Get a credit card
Sadly, many college students abuse their credit cards, neglect paying their bill on time, and consequently ruin their credit before they even enter the work force full-time. They then spend years trying to clean up their credit and suffer higher interest rates due to their earlier mistakes. Don't fall into this trap!
As a student, you are offered the privilege of establishing credit at an early age. Credit card companies make it easy for students to gain a credit card, even if they do not have an established credit history. You will either be offered a low limit unsecured credit card or will be required to set up a secured credit card, where you deposit, say, $500 into your credit card account. Then, you can use up to that amount in credit until you establish a history with that company.
Once you've proved that you make regular, timely payments they will eventually refund your cash - sometimes in as little as 6 months. Use this to your advantage! Credit cards are a great way to pay for your college books and materials, dorm supplies, and gas. Not only are you freed from carrying cash with you at all times, but your monthly statement provides you with a breakdown of expenses to help you keep track of how you spend money.
Another benefit of owning a credit card is that you can manage your account online and even set up regular payments with your online checking account. That way, you will only need to ensure that you have sufficient funds in your checking account to automatically make your payment each month. The key is to maintain a low balance on your card to minimize interest fees by paying more than the minimum balance each month. Ideally, you will pay off your entire bill each month and quickly build a strong credit history during your college career.
Setting up good routines now will have a lasting impact on your future. By the time you leave college, you will be confident about managing your money, possess a solid credit history, and enjoy lower interest rates on anything you buy whether it's a new car or even your first home!