Get ready, freshman, you’re in for the ride of your life. College is beginning and nothing will be like it was in high school. You’re going to have to start studying harder, managing your time better, and most importantly, keeping a close eye on your finances.
For the majority of us, debt starts creeping in when we begin college. We get sucked in at orientation or the first day of school to sign up for a credit card, we typically eat out more, and we’re just not as savvy with our money as we were with our allowance at age 10.
There is something you can do to prevent a lot of grief and regret come graduation day. You can begin by reading this post and following our advice on the following financial tips for freshman:
We’ve said it before and we’ll say it again: create a budget to keep track of all of your income vs. outgoing expenses. You might not have much of an income, unless you count your student loan, but you should keep tabs on that as well. You may realize that you’re getting more in student loans than you will need to live within your budget. If that’s the case, send the money back. You don’t want to sit on that money, or worse, spend it frivolously if you don’t have the need for it. The interest will accrue if it is an un-subsidized loan and you’ll have to pay it back in spades after you graduate.
A big chunk of your college budget could be spent on textbooks, but it doesn’t have to be. Instead of purchasing your book from the campus bookstore right off the bat, comparison shop. Take a look at our price comparison feature when you’re buying, renting, or selling back books so that you can get the most bang for your buck. When you’re taking general education classes, really think about whether you’ll ever use the textbook again. If not, renting might be your best bet, and you can reduce the number of unnecessary books you accumulate.
Build Your Credit
The easiest way to start establishing credit is to own and use a credit card. The best credit card to have is one issued by your bank. They generally have the best rates and most of them have cards that are especially for college students. If you keep your line of credit under $500 and pay it off every month, you’re on your way to a near perfect credit score, assuming you have no other debt of course. Establishing excellent credit will be very important down the line when you want to finance big purchases like a car, home, major appliances, etc.
Think Before You Buy
This might seem pretty intuitive, but for some, spending is a very impulsive activity. If you’re one of these people, start working to break the habit now. Before every purchase, no matter how big or small, think about whether you “want” it or absolutely “need” it. If the item is in the “want” category, consider your budget first and determine whether you have that much money set aside for discretionary spending. If you do and your life just wouldn’t be complete without the item, then you’ve probably already made up your mind and will purchase it. But if there’s an ounce of doubt, think about the opportunity cost and what you’re giving up if you buy. Is it worth it?
It won’t always be this hard to save money. In just a few years, you’ll graduate and hopefully land a killer job. At that point the hope is that you’ll be able to increase your budget to live more comfortably within it. If you think about this in terms of “big picture”, living four years as a frugal undergraduate student will be a small price to pay for how much you’re providing your future.
Do you have other financial tips for incoming freshman? Please share them below!