The college experience can be extremely enriching. It is a time to spread one’s wings inside a laboratory, to test limits and boundaries, to explore and experiment, and to set aside four years for the simple joy of learning. For most people, friends made during college are the closest; romances during college are the most pure; and lessons learned during college have the most profound effect on the rest of their lives.
College is also a time when a huge number of people (myself included) begin to unravel their financial futures. Here are 4 tips that can help to prevent that from happening.
Get a Job
Even if your parents are paying the bill, you have ample student aid, or you’re the recipient of a full scholarship, you should still get a job. Financial planning for college covers all the money you need to go to school, but you’re still going to want money to do things – like a weekend trip or a beer night – that fall outside the budget created for you by dad, Uncle Sam, or the scholarship board. Working, getting paid, and managing your money is the first step to financial health in college and afterward.
Remember: All Money Is Money
The student loan crisis in the United States is starting to get attention – but most of the shouting is being done by gray-haired political pundits. For young people embarking on a college career, the word “loan” is just a bridge from the front door of the family home to the front door of the college of their choice. That’s fine: just don’t forget that the money you borrow for college is real. It’s your money. You’re going to have to pay it back, so make it count.
Be Careful of Credit
Credit is where most college kids get into trouble. They show up for orientation, and there are all the credit card companies lining up to give them their first cards. Then there are a series of financial pressures, most of which they aren’t well equipped to deal with. There is the natural poverty of college. And their credit card debt goes up. Because credit cards encourage cardholders to make minimum payments rather than pay off balances, far too many college kids graduate from school with substantial unsecured debt in addition to their student loan obligations.
When using credit, a good rule of thumb is to stay as close to the loan as possible. For example, take a shorter loan versus a longer one. Use credit with a rigid payback structure before credit cards. The more assertive your borrower is about getting their money back, the more assertive you will have to be about paying it, reducing your reliance on credit (which is good) and the buildup of debt (which is very good).
Go Cheap
The fact is that you don’t have to spend much money to have a good time – especially during college, when very few of your fellow students have any money. This is a time to come up with ways to enjoy yourself, find diversions and entertainment, and enrich your life without paying for it. Successfully learning that lesson can save you tens of thousands of dollars over the course of your life.
