How College Freshmen Can Prepare to Handle Their Own Finances is a post originally published on: Everything Finance - Everything Finance - Its all about Money!
As you enter your freshmen year of college, you embark upon a fun and exciting time. However, it can also be a difficult and confusing life change.
While this may not be the case for every college freshman, for many, college is truly the first time they’re out on their own. It may be their first time living away from their parents and being in control of various aspects of their lives. College is often times seen as the beginning of adulthood, as students learn to cook, clean, and handle their own finances all on their own.
If you’ve never dealt with your finances before, it can be a bit daunting. Plus, if you don’t know what you’re doing, it can lead to some major financial mistakes as a college freshman. Instead, be prepared and follow these tips to prepare yourself to handle your finances come college.
1. Create a Plan
You’re first step to preparing to handle your finances is simply discussing your plan with your family. Know what you’ll be in charge of when it comes to your finances and payments, and whether or not they’ll be assisting you in any way financially. Once you figure out what you’ll be responsible for, you can plot out your expenses and figure out what you’ll have to pay every month.
2. Have a Budget in Place
College is full of spending temptations, especially when you throw peer pressure in the mix. By developing a budget ahead of time, you’ll be able to more successfully limit your spending and control your money.
Be sure to list all sources of income, and then estimate all of your expenses. Consider the cost of school supplies, books, meals (or meal plan), gas, internet, laundry, etc. Once you’ve totaled everything together, subtract that from your total income. If you run short, you’ll have to find ways to supplement your income to cover everything or cut out unnecessary costs.
3. Find a Bank
One way of ensuring financial success your freshman year is finding a bank that’s not only convenient, but that fits your situation and circumstances. Research the various banks around your school and find one that fits you in terms of balance requirements, saving options, and deposit and bill pay features. Moreover, look carefully into ATM fees, and make sure your bank has at least one ATM near-by so you’re not constantly paying excess fees.
4. Discuss & Understand Credit
For many, college is their introduction to a Credit card. However, while it’s important to have credit and build it up, it’s more important to learn how to use your first credit card wisely. College freshman will likely be bombarded with credit card offers those first few weeks at school and they can be hard to resist.
That being said, don’t fall for gimmicks, like free merchandise, and open up an array of credit cards. It’s unlikely that you’ll find the best one for you, and instead, might end up with one with a high-interest rate. Take time to read the fine print and research various credit cards. Find one with no annual fee, a manageable interest rate, and possibly rewards. A good place to start when considering a credit card is often with the bank you have your checking account at.
Heading off to college? Make sure you've done these things to be ready to handle your own finances!
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5. Have a Plan to Save
It may feel like you have years ahead of you to save, but in reality, if you want to build a solid savings and retirement fund, now is the time to begin. Moreover, it’s always important to provide yourself with some sort of cushion or emergency fund should you get in a bind. Have a plan, and put a category in your budget to save a little each month. That might mean eating out one less day of the week or opting out of a night out, but you’ll be glad you did in the long run.
6. Sign-Up for Alerts
In our digital world, your mobile phone can be your best friend when it comes to your finances. It provides you with the opportunity to stay on-top of your accounts no matter where you are. Through apps, you log-on anywhere and anytime to check you balance, pay bills, and transfer money. Moreover, by signing up for alerts, you can be instantly notified of an overdraft, possible problems, or suspicious activity. Another great, mobile tool to use is an app like Mint or Level, which can help you keep track of your budget, spendings, and finances in general.
7. Spend Wisely
When you’re out on your own for the first time, it can be tempting to spend your money on frivolous things your parents wouldn’t have let you buy or to splurge. However, the key to staying financially secure is to practice wise spending. Keep track of your budget and savings and know what you can afford to spend.
Furthermore, be conscious of your purchases. Look for deals, use coupons, buy generic brands, and look for free or inexpensive entertainment options on campus. It’s also important to be wise when purchasing school materials as well. Look for ways to save on products and utensils, and always look into buying textbooks used or renting them, to save a significant amount. This is also important when it comes to credit card use. Don’t splurge or buy something you normally wouldn’t just because you can charge it to a credit card.
8. Get & Stay Organized
One of the keys to staying financially secure is staying organized and on-top of your finances. Keep all records, information, and your budget organized. Make sure you have a calendar and plan for when things need to be paid and keep track of expenses and purchases. By keeping an eye on things and not letting anything fall behind, you’ll keep yourself on track and prevent financial mistakes.
Your freshman year of college is supposed to be exciting and new. After all, this next stage of your life is an adventure that you’re in charge of. Nonetheless, don’t let the excitement of college leave you ill-prepared to handle things like your finances on your own. Don’t let the freedom of college allow you to make preventable financial mistakes. Create these habits and you’ll be prepared to take the reins of your finances.
How much are you going to be financially responsible for your freshman year? How are you preparing for it?
