Every fall semester represents the start for wide-eyed college freshmen who will begin their path toward a diploma. Sophomores and juniors are starting to enter into specific classes for their major, whereas seniors are counting the days until graduation.
No matter what their academic standing, students need to care about their finances in addition to studying, tests and various social aspects. It may seem like a lot for one to to keep track of, but developing good financial habits will prove beneficial both immediately and in the long-term. Before going back to school for another semester or moving into the freshmen dorm, every student needs to ask his- or herself some very important financial questions.
What are common mistakes to avoid?
Tuition, food and living expenses have ballooned in recent history, making college an expensive undertaking. As a result, many students take out loans to cover the cost. Students should temper expectations about the loans. Loans do indeed help in a short-term timeframe, but they must be paid back eventually.
According to Money Control, students should not accumulate debt to the point where it is larger than their first year salary. However, this debt is not typically all from loans. Credit card payments can also add to the debt total, sometimes in unforgiving ways.
Students should be careful to avoid swiping credit cards as much as possible. Buying now and paying later may be, at times, unavoidable, so it is even more important college students make their monthly payments by paying off their balance in full every month. Letting debt grow may lead to further bad habits, such as opening a new low-rate card and transferring a balance to it. Money Control said this will show up on credit reports, potentially lower FICO credit scores and hamper job prospects.
What is the financial plan?
After first stepping on campus, most students should look for employment. Everyone will have different financial backgrounds, but working while in school will provide valuable experience and help students manage their finances. Money can be used in a few different ways. Paychecks either go toward paying rent, utilities and grocery bills, or become extra pocket change because the student's main financial obligations are covered by loans.
No matter the plan, Money Control advised students to stick to it. Students should not go out and buy expensive items, or spend money on entertainment when funds are low and payday is not for a few days. There is no denying college is filled with fun social outings, but the choice between buying food or going to a concert is not a difficult one.
Are there any scholarships?
Every student should inquire about scholarships, even if they are awarded a few hundred dollars. These financial awards are typically given out based on prior academic excellence and because the student has demonstrated financial need. In order to receive a scholarship, students will have to provide transcripts and essays. They should not dismiss these awards. Instead, students should seek them out by talking with the financial aid office.
However, Vox writer Libby Nelson recommended students make sure scholarships carry over to the following year. Students may find junior and senior year tuition costs are higher because schools front-loaded freshman year scholarships.
Before heading away to school, every student should sit down with their parents and discuss finances, and do so again when they arrive to campus. One conversation may reveal plenty of new information to help students afford school and understand their options so post-graduation life is not stressful.
For more information about smart ways to manage your finances, contact Landmark Bank.
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