You may feel ready for the academic and social challenges of college—but are you ready for the financial end of things? If you’re feeling a little uncertain in that regard, you’ve got a couple weeks to shape up and get financially fit for freshman year.
Following are five simple steps to get you started:
- Get the right tools. Your first stop should be your local bank. It’s never been easier for college students to bank away from home. Before you head off to college you should have a checking and savings account and a debit card. Sign up for online banking and learn how to manage your accounts, transfer money, pay bills online and more before you leave home. Check into any online features that will help you track your spending, make a budget, etc.
- Be a master budgeter. Budgeting may sound painful and boring, but really it’s all about being in control of your money. There is enough to worry about in college without stressing out over money. The best way to avoid that stress is to know where your money is going. Keep careful track of what you spend. Review any automatic tracking associated with your online bank account. Do you just see a lot of ATM withdrawals? Save receipts at the store, at restaurants. Know where your money is going. Think ahead about any fixed expenses you might have and plan for them. As you learn more about your expenses, record them in a budget. You’ll quickly see where your money is being spent. As a college student, you won’t be able to afford everything you want on your own. Making a budget can help you plan for and afford what’s really important to you.
- Get smart about your student loans. When you’re borrowing money for school, knowledge is key. Don’t just blindly take out a student loan and plan to think about it later. Get familiar with your student loans right now. Know exactly how much you’re borrowing, what the interest rate is and when repayment begins. Use online calculators to approximate what your monthly payments will be when you graduate. Carefully track your borrowing as you continue through school. Keep a file with all student loan-related correspondence from your lender. Pay attention to whether your loan gets sold and any other changes over time.
- Earn money/save money. Are you considering getting a part-time job when you start college? For many students, it’s a good plan. You may find yourself with more spare time than you anticipated and having a job can force you to stay a little more organized and disciplined about the times you have to study. If you’ll be working, try not to spend everything you earn. I know that your finances will be tight, but setting aside a little out of each paycheck is good habit to get into and get help you build up some funds for an emergency. Try automatically depositing some of your paycheck into savings from the very beginning and chances are you won’t miss it.
- Get credit-wise. Using a credit card responsibly during college is one way to start building good credit. The key word here is “responsibly.” If you get a credit card, be sure you understand the details. You should understand the interest rate and how it’s calculated. Learn whether your interest rate is an introductory rate that is subject to change. Take the time to understand any rewards program associated with your card, so you can maximize the benefits. Carefully review your bill each month to ensure that the charges are correct. Try not to charge more than you can afford to pay off in full each month.