Personal Finance For College Students
College life offers a unique time in a young person’s life where financial literacy education is specifically essential. It can also be the year of your adult life. It is an exciting time that is filled with various new experiences, yet it is simple to make mistakes. Typically most college students are living on a budget. If not, they are likely college students getting themselves into a cycle of debt. Whereas neither is fun and straightforward, you can become smarter about the way you spend your money. Bear in mind that the key to financial success is being aware of how you are spending your money.
Besides, you should understand there is a difference between being cheap and having to be savvy. There is nothing wrong if you live within your means, rather than beyond. One of the greatest strategies to be financially successful is to be smart about your most significant expenses. This will frequently mean making hard decisions in the near future so that you can be in an excellent financial position long term.
Develop an art of budget
A personal budget is a financial strategy that allocates future income toward expenses, debt repayment, and savings. Typically it answers the question, where does the money go? Budgeting is a common dilemma faced by many people and households when it comes to money management and budgeting. Effective money management starts with an objective and a step-by-step plan for spending and saving. Financial goals should be specific, realistic, have a timeframe, and imply an action to be taken.
Save on housing
In case you live in the dorms or rent an apartment, your living arrangement will be one of your most significant expenses. So, if possible, consider reducing it entirely and keep living with your parents until you graduate and get a full-time job. And if that is not an option, consider living with additional roommates or in a more budget-friendly neighborhood.
Drop the car
Most college students always lack two primary resources: money and time. A car is a huge help, but it adds significant financial pressures at a time that you are possibly already spreading yourself too thin. To save money and support yourself, try using public transportation around college for a month, and see in case you can switch over from the car at least part-time. You can also try sharing rides with other students. Have students pay for the gas when you drive them, and pay for the gas when they drive you. Encourage extra students to participate. This is a great strategy to support the environment and make new friends too. Alternatively, select a credible online university that offers you access to professors from some of the globe’s most respected Universities. Studying from home is an excellent way to reduce commuting costs.
Use student discounts
Your student card is a great asset; it gets you lots of discounts- from restaurants and theaters to travel opportunities. Check with your college which organizations have partnered with it, do not be shy to ask about student discounts whenever you are purchasing something from other organizations as well. Some organizations do not officially partner with colleges, but still, like to support by offering them discounts.
Avoid buying new textbooks
Textbook prices have significantly increased. Instead of purchasing expensive textbooks, you can purchase and rent used books from sites such as Amazon and TextbokkRentals.com, or fellow students. Other students choose universities that utilize free, open-source textbooks or upload all the necessary information online, so you would not need to purchase textbooks at all.
Build professional relationships
Creating relationships may not appear like a personal finance tip per se; however, students must remember that relations with the right people are what will eventually open financial opportunities for you. While at college, take time between studying and class sessions to socialize with your fellow students. One day, they could become industry colleagues you will want access to. Look for professors who can mentor you so that you can create a closer relationship with them. Connect with people outside of your university too. Attend industry conferences, or at least engage in group discussions on the professional social network Linkedln. Your future colleagues will value a young student who is taking an extra step to get involved in the industry.
On top of various low-interest government student loans available, you can also consider getting an on-campus part-time job, a part-time job at a paid internship, or a corporation. There are often many on-campus jobs and paid internships accessible to students. Many of the on-campus paid internships (like a laboratory assistant or teacher’s assistant, for instance) can offer you real-world experience in your particular area of study. You can utilize this experience after graduation to begin your career choice to field a little quicker and more comfortably.
Apply for scholarships
You can also consider applying to as many scholarships that you are eligible for, as student scholarships are not a loan at all- they are granted based on eligibility. They need and are necessarily an avenue you can use to reduce your education costs with no adverse effects in the short-term or long-term.
Apply for Federal student loans
You can apply for a government education loan as opposed to a private loan from a bank or another lender. These government loans are subsidized (meaning the government pays on the interest, whereas you are attending school, and you do not begin making payments until a set time after you graduate). They are coupled with lower-than-average interest rates, making them highly desirable loans. These government loans are commonly acknowledged as being the absolute best student loan you can get.
Federal student aid and internships
The Free Application for Federal Student Aid, the FAFSA, should be each student’s first stop on the road to reducing the amount of student debt they may incur. The second stop should be the United States Department of Education’s page on grants and scholarships and their page that offers details on Work-Study programs.
Credit cards can either be the worst experience to your financial budget and credit score, or the best thing. Which one it depends purely on how you utilize them. With mindful, sparing usage and responsibility, credit cards can help you to develop credibility and even give your credit score a huge boost. The credit cards that are more recommended are prepaid credit cards. These credit cards are generally reloadable debit cards that can positively impact your credit score. Since these cards are prepaid, there is no fear of spending more money than what you have, which is a genuine concern with standard credit cards.
Standard credit cards make it fast and incredibly easy to spend money- often money that you do not have. This is a very common pitfall that results in many getting deep in debt. In case you absolutely insist on obtaining and utilizing a standard credit card, you should read about all the associated fees, possible hidden charges and to find a card that does not have an outrageously high-interest rate.
You should only utilize that credit card in total emergencies or when you have the cash to make payment for any purchases you make on it entirely. This way, you will save that money so you will be able to pay it off as soon as the bill is due. Paying the minimum needed amount on credit is the same as paying the minimum amount on a standard loan. You will be paying mostly interest with every payment, and you will barely be making a dent in the original principal amount owed.
Be careful if you take a loan
In case you have to take out a loan for whatever reason, there are a few agreement clauses that you should completely avoid at all costs; These include:
- Unreasonably high-interest rates
- Inclusion of an early repayment charge: This indicates that in case you clear a loan before the set deadline, you will be paying a hefty fine.
- Acceleration clauses: which states in case the borrower defaults for any reason, the balance of the money owed will be owed in full immediately with no resource options for the borrower to remedy the situation.
- Balloon payment clauses: monthly payments for the term of the loan that is too small to pay off the full loan, with a final payment that is typically extremely large, brings the debt balance to zero.
- Attorney’s fees clauses: which enables the lender the charge you for their attorney charges that will incur during the procedure of suing you in case you default on the loan for whatever reason.