7 Best Finance Tips for College Students
It seems like a really daunting task, but getting your finances in order before you start college can make the whole experience a lot easier. College is one of the most expensive experiences in your life and having an emergency fund and being strategic with your spending can help alleviate some of that stress.
In this article, we’ll discuss some strategies for college students to get their finances in order before they even start school.
7 Best Finance Tips for College Students
1. Get a comprehensive financial plan and make a budget
One of the best things you can do for your college years is get a comprehensive financial plan, as well as a budget. A financial plan is where you can clearly list all of your assets and liabilities (what you own, what you owe) and goals for the future. Doing this will help set up the steps to accomplish your goals, such as saving for a house or retirement.
While it’s never too late to get yourself on track with your finances, one of the best time frames to start getting things done is right after high school graduation. Why is this? Because a lot of young adults have time on their hands and they can focus on working towards achieving their goals. Waiting until you’re older leaves less time and opportunity to achieve your goals because you have other responsibilities and possibly family to support.
Once you get a clear idea of your assets, liabilities, and goals, the next step is creating a budget. And budgets are not always easy to make or follow, but that doesn’t mean it won’t be worth it in the long run. You may want to take advantage of financial planning software that can help set up a budget for you based on your goals.
2. Get an emergency fund
One of the best things you can do for your finances is to have an emergency fund. Think about what would happen if the two or three months the money you hoped to use next semester suddenly came up short. Where would you turn and what could you do?
This is why having a small savings account (often referred to as an emergency fund) that contains at least $1000 is a good idea when going off to college. You never know when something will happen that may put a stop to your financial plans, but having a back-up plan can help ease some of its devastating effects.
Some examples of emergency situations are:
• You get sick and have copays that aren’t covered by your insurance.
• You get hit by a car and have a lot of medical bills.
• Your college doesn’t give you the financial aid you were promised, or you decide not to stay at your school.
3. Consider getting a credit card for emergencies only
While we don’t necessarily recommend using one, a great way to put some money aside for emergencies is to consider getting a credit card that has no annual fee and doesn’t charge high interest rates. Typically, after graduation, if a person has no credit card and no debt, they are considered a good credit risk and are often approved for lower interest rate loans.
4. Make sure you get the financial aid you need
Generally, once you go off to college, it’s very hard to get the financial aid you need. But the best thing to do is to apply right away since there may be some money available that you can use. This poses the question of whether or not it’s best to apply now or wait until after graduation? The answer is that it depends on your situation and how much money you can put towards your education.
But if you don’t receive what you have applied for, you can always reapply right after you graduate. You may need to do some additional research, but the financial aid website has programs and resources to help students get the money they need. The sooner you apply, the more likely you are to get your financial aid, so even if it’s your final semester of school, it should not be ignored.
5. Use student loans wisely
When it comes to student loans, there are generally two types: federal and private loans (such as Sallie Mae). Federal loans are guaranteed by the US government and private loans are more like credit cards with high interest rates (and fees). Federal loans are usually better because they often have lower interest rates and you can remake payments, or simply pay off the entire loan all at once.
Private loans on the other hand usually carry higher interest rates (more than 8%) and/or fees that make it hard to pay off the debt in a timely manner. There are also programs available to help you make your student loan payments more manageable, like Income-Based Repayment or Pay As You Earn plans.
If you haven’t started school yet, there’s still time to do it the right way! College is expensive enough as it is; make sure you don’t end up leaving with debt and no job.
6. Get a side job
One of the best ways to make money while in college is to get a side job. This gives you more time to focus on your classes, while also providing you with extra funds for a rainy day. If you’re struggling with how to find a side job, then check out our article on how to make money from home or start looking earlier at summer jobs.
The best part about finding a side job is that it can give you extra income, while also offering you the extra time to save money.
7. Take advantage of student discounts
There are many great discounts available for students that can help reduce the cost of your college years. These discounts can cover anything from books, to groceries, to cell phone plans, to even movie tickets.
Here are some discounts you should take advantage of while in school:
• Textbooks – Instead of buying your textbooks at the campus bookstore, look online for used versions or rent them. You may also find some great deals at Half Price Books!
• Food – Almost all grocery stores now offer student discounts or loyalty programs that give you money back when you buy specific brands.
• Insurance – If you live in the US, there is a good chance you can get a discount on your car insurance if you are a student. Check with your local insurance provider.
There are many ways to earn money while in college that can help if you need some extra cash. Look at the options you have, investigate your finances, and keep a close eye on how much money is coming in. Even if you don’t have your working papers or have bills that aren’t being paid on time, look for ways to save money and be smart about using your credit cards.