With the calendar turning toward August, college students across the country are gearing up for either another fall semester, or perhaps their first one.
Attending college is seen by many students and their parents as a stepping stone that bridges the gap between the teenage years to young adulthood. Not only are young adults studying to earn a higher degree, but for many, college represents the first true experience they'll have living away from home. With that comes all of the fun, and mistakes, typically encountered in the four or five years it takes to usually earn a bachelor's degree.
Part of what a student learns may not even be taught in the classroom. Financial management becomes an important lesson for students, as they have to balance student loans and money from jobs outside of class. And for many, they also have to take care of monthly costs for off-campus apartments, utilities and groceries.
Whether you're anxious to start college as a freshman or heading back to campus for the last fall semester, here are some ways you can financially prepare yourself for college.
Open checking and savings accounts
A checking account is a must-have whether you're going to be moving away for school or commuting while still living at home. With this type of account, you can have a debit card that will be linked to the account which you can use on a daily basis to buy whatever you need, such as school supplies to going out for food with friends.
Additionally, once you secure a job on campus or somewhere else, you can utilize direct deposit to put paychecks into your account automatically. There's no need to collect a paper check or walk to the bank to deposit it.
You'll also want to consider opening a savings account while in school. Your monthly income is likely limited because most of your time is spent in class and taking care of school-related tasks, but setting aside money every month will provide many benefits down the line.
By saving money as often as possible, you'll start developing a safety net that will come in handy until you have a higher income. When you start working and paying for rent, the goal is to have an emergency savings account that is worth at least three months of expenses.
Start developing your savings habits early so you aren't overwhelmed by the unknowns of the future. Aim for a monthly savings goals, and remember, the amounts don't have to be outrageously high. Even setting aside $50 is better than nothing - over the course of one school year, you could save $450 plus any interest that accumulates.
Assuming you save the $50 a month throughout your entire collegiate career, you'll not only leave with a diploma, but also just under $2,000 in savings.
A budget is your best friend
Every student needs to learn the ins and outs of budgeting while in school. When income is limited, having a budget to guide your monthly spending habits will help ensure you don't overly rely on a credit card, or find yourself unable to eat for a week.
Budgeting becomes even more important once you decide to live off campus in an apartment, as is common for many students after their first year. Rent, groceries, utilities, renter's insurance and other expenses become the most important items to account for.
However, according to CNBC, not many students know exactly how to properly budget their finances. Consider asking your parents for some tips on how to get started creating a budget. Additionally, various online services and mobile applications can also help you develop monthly budgets that will alert you when you're approaching spending limits.
Budgets are important, but don't hesitate to reach out to a parent if you need help.
"Credit cards will help you build up your credit score."
Limit credit card usage
Having a credit card to your name while in college comes with many benefits, but if you aren't careful, you can very easily leave school with a mountain of debt to your name.
Make sure to pay off your balance in full every month. Otherwise, if you come close to maxing out the card, you'll actually harm yourself financially.
You should consider obtaining a credit card, but only use it sparingly. Using it will also help you further develop your budgeting techniques.
As a college student, you already have a lot on your plate. From academics to social activities and hunting for jobs or internships, college is often a stressful, yet fun time. But it is also during this period you'll need to financially prepare yourself for the school year and the habits you develop as a student will carry over into the working world.
For more information about smart ways to manage your finances, contact Landmark Bank.
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