Money Moves for College Students: 10 Steps to Take Right Now
With little guidance, most money moves for college students end up being the wrong ones. It’s easy to see why. There are no mandated financial literacy courses in high school.
When you arrive at college, you’re inundated with a sea of credit card applications promising low initial APRs and guaranteed approval. The promise of buy now, pay later is just too much to pass up, especially when you haven’t been taught about concepts like emergency funds and automated savings.
In the following article, we will be hoping to help you avoid these debt traps once and for all. If you’ve done extensive study into money management, then you’re going to recognize several of these tips. Either way, it pays to have these at the forefront of your mind as you move from high school to college.
1. Ignore the Credit Applications
Whatever the government is doing to crack down on aggressively marketing credit card applications to 18-, 19-, and 20-year-olds isn’t enough. The enticement of applying for any buy-now, pay-later scheme is an affront to responsible financial literacy.
Credit card companies do not want such literacy courses taught to you while you’re in high school because they know that you’ll come prepared for their tricks and won’t submit as many applications. Be mindful of this before you hit your new campus.
Credit cards are not your friend. They are not a viable way of buying any large-ticket item like a home or means of transportation. They charge astronomical interest rates to keep you in debt. In short, the encourage financial irresponsibility, and you’ve already got enough of an uphill climb with the cost of your education.
2. Do Not Spend More Than You Make
It seems like a simple concept, but it can get tougher to practice, especially when you have major credit card companies skilled in marketing their products pushing a card that’s designed to get you to spend more than you make.
Before you go to college, sit down and do a forecast of your expenses as well as any revenues you’re guaranteed. Make sure those revenues always stay higher than what you’re having to shell out to live. If you can’t get there on the money you have saved up or receive from scholarships, either get a part-time job to pay for the difference or make cuts.
Never borrow money to live on!
3. Maintain Your Scholarships
College isn’t cheap with or without scholarships. Losing the financial assistance you’ve earned is like cutting off your nose to spite your face. Make sure you know what all the fine print is on your scholarships before you go to school.
If one of the scholarships requires you to live on-campus, then by golly, stay on campus. Don’t give up free money for a want or convenience. You’ll end up regretting that you did it in the long run.
4. Keep Undergraduate Debt Low
Many college students jump right into the debt vortex without pausing to think about how they might be able to control their costs throughout the first four years of college. Start with the free college-level courses offered through your high school. Take all of them you can. More and more schools across the US are making it where you can graduate high school with an associate’s (two-year) degree at the same time.
If you can’t get all the work done in high school, then make a community college your next stop. Community colleges are much cheaper than private or public four-year schools. Some are even free. Find one that works for you, and don’t leave until your general education requirements are complete.
From there, you only have to spend two years at a four-year school. Most are created equal for undergraduate work, so stay in-state and focus on the cheapest that offers your field of study. By following these steps, it’s possible to get a bachelor’s degree with very little debt.
5. Invest Your Spare Change
Spare change can actually add up to big dollars. Instead of letting it accumulate on a dresser, where it will be wasted on sodas and Reese’s Peanut Butter Cups out of the vending machine, go all-electronic and tie your account to an application like Acorns.
You can use Acorns and others like it to round up each purchase to the nearest whole dollar. That “round-up” will go into a separate account that’s automatically invested into a fund of your choice. The act of giving becomes automated and isn’t even noticeable. Over time, however, it can add up to some pretty noticeable gains. All that, and the dresser stays clean!
6. Play the Long Game
Realize that you’re going to be in school for longer than four years. At least you will be if you want to get an advanced degree and set yourself apart from other job candidates. Plan on a master’s degree in your field of study at the very least.
That means three years of your college career are going to get very expensive. If you know this going into your freshman year, however, you can start stowing away money and thinking of other creative ways to finance this part of your education.
That could mean saving part-time job money as you advance through your undergraduate years. It could mean applying an unexpected inheritance to the master’s degree period. It could mean getting a work-study job, and, yes, borrowing money.
There’s nothing wrong with borrowing money if you are limiting the amount and, again, NOT borrowing money to live on. Long-term planning is essential to pulling this off.
7. Get a Job If You Can
A job can be very helpful for putting back money. Just make sure that it doesn’t interfere with your studies. Also, make certain it doesn’t become so all-consuming that you have to reduce the number of credit hours you’re taking for the semester. Education trumps part-time hourly work.
8. Set a Budget
You live and you die by your budget. Don’t let impulse buys knock you off track. The budget is imperative for knowing what your revenues vs expenses are. Beyond that, though, it gives you the experience of budgeting while your finances are still relatively easy to figure out.
As you get older, you’ll find yourself with more bills, more investments, more debt. Balancing all of that while trying to build an emergency fund can feel like too many plates are spinning in the air if you don’t have a good baseline knowledge of building an effective budget.
9. Manage Your Splurges
Notice we said “manage,” not cut out your splurges. Why the word choice? Because, frankly, cutting out splurges is a bad idea. Depriving yourself of the things you want almost inevitably will lead to frustration. That frustration is the kind that causes you to snap and go on a binge that results in more dollars wasted than had you simply allowed yourself a splurge every now and then.
Figure out the low or reasonably-costed treats that you will give to yourself for each milestone reached. Determine the frequency that your budget can handle as well. Then, vow to reward yourself for a job well done or whenever you need a pick-me-up. As long as you can control cost and frequency, there is absolutely nothing wrong with spending a little money on what some might even deem “frivolous.”
10. Invoke Discipline
By the same token that you have to make allowances for yourself, it’s also important that you know when to step on the spending brakes. This can require a great deal of discipline. However, delayed gratification almost always results in greater long-term success. Any time you feel compelled to impulse-buy or do something else that feels easy, pull in the reins a little.
Ask yourself, “Will my life be lesser if I put this off until tomorrow?” The more you can practice this mindset, the easier it will be to enact discipline.
These Money Moves for College Students Set the Tone for Success
We hope this extensive look at the top money moves for college students has got you thinking about what kind of a spender, saver, and budget-maker you’re going to be once you’re off at college calling the shots.
Are there any good tips that you would like to add to this article? If so, please feel free to do so in the comments section below.
[Featured Image by WGLT]
Photo by Sharon McCutcheon