The financially carefree days of college students are quickly disappearing in the rearview mirror. Wide-reaching surveys indicate upwards of 70 percent of college students experience stress about money before graduation. It almost goes without saying that this newest generation may not be overly welcoming to “advice” from their parents or grandparents. After all, those are the people who suffered massive student loan debt, a subprime mortgage crisis, and the Great Recession.
But, as the saying goes, sometimes experience is the best teacher. If that’s true, people over 40 know a metric ton about how to avoid financial mistakes. That’s why college students may want to consider tips from everyday people who learned hard lessons rather than repeat the cycle.
Why Should You Care About Money In College?
Spending your college years worrying about money runs contrary to the idea of the experience. You learn exciting new things, make friendships that last a lifetime, and graduate with a degree that opens vast opportunities. College students are at a critical juncture where the future is seemingly limitless. The fact that financial stress grows as you get closer to wearing a cap and gown is reason enough to take proactive measures.
Although a pleasant experience is important, making the right financial decisions while in school impacts your financial future. Keep these simple recommendations in mind or share them with a friend or family member to ensure that their college student manages money and builds their credit before graduating, helping to put them ahead of the class.
Take Advantage of College Amenities
Colleges and universities typically invest in student activities designed to entertain and help people bond. These complimentary on-campus amenities help college students save money and enjoy a fulfilling educational experience. Rather than drop $30 going out to the movies and another $20 getting a decent entrée, consider gathering friends and taking advantage of these options. Truth be told, the cost was already rolled into your tuition.
Beware of School-Sponsored Accounts & Offers
Well-meaning administrators try to create convenient options for college students to use on campus. Branded with the institution’s name, savings, checking, and credit card accounts appear enticing at first glance. As a student body member, young adults feel confident they will get approved without involving their parents.
But rarely — if ever — can an organization focused on education provide the lowest possible interest rates and benefits as a local credit union. In all likelihood, the accounts will be part of a corporation’s portfolio designed to siphon off higher-than-necessary interest and fees from college students. Be sure to check with your local credit union before heading off to school or by visiting them online to review their potential checking accounts or credit cards that are geared toward a college student’s best interest.
Open a Reliable Checking Account
Perhaps the best solution to not repeat your elders’ financial faux pas is to conduct due diligence and open a low-maintenance checking account that benefits college students. Corporate banks excessively charge fees because they need to turn profits and pay shareholders. By contrast, credit unions are not-for-profit organizations that are ensuring their members get the right product for their needs, not their own sales goals. College students can usually find an affordable checking account that features access to surcharge-free ATM's, CO-OP shared branches for convenience while away from home, and low monthly maintenance fee requirements when you apply for a checking account at a local credit union.
Find the Right Credit Card
If you are straight out of high school and a corporation is willing to hand you a pre-approved credit card, be wary of high interest rates and hidden fees. To get approved for a low-interest credit card, you typically either need to build up a reasonable credit score or have a parent co-sign.
If you want a reliable low rate, rewards, or cash back credit card with reasonable rates, contact your local credit union. By using your first credit card responsibly, you can build a robust FICO score while attending college. Having a degree in one hand and an established credit score in the other puts you on the fast track to financial success.
Check Statements Regularly
Setting aside an hour each month to review bank accounts and other statements helps college students in two ways. First, it puts your mind at ease about any mistakes or overcharges that may appear. If there’s an error or overcharge, you can have it promptly corrected. The second benefit involves establishing good financial habits. It’s essential to keep track of your finances and hard-earned money.
Create Financial Goals & Budget to Stay Focused
It’s important to generate some income while attending classes. On-campus jobs can be optimal for earning money without incurring commute times or expenses. If you are new to college life, apply for every suitable on-campus position and accept the offer that makes sense for your financial needs. Then build a monthly budget around that revenue that includes necessary and discretionary spending.
Savings Accounts are Meant for Emergencies
It’s important to place a portion of your earnings in a savings account for emergencies. Reasons to tap into that backup money do not include concert tickets, a road trip, or new clothes. Emergencies for college students might involve purchasing textbooks or an urgent care visit. With any luck, you’ll graduate with enough cash in the bank to get an apartment after securing a job.
Get A Second Opinion On Large Purchases
Taking a portion of a student loan, scholarship, or even a tax refund and spending it on a big-ticket item may not be the best idea. Expensive devices only last a few years before becoming outdated. And buying new dorm room furnishing probably won’t make the journey into post-college professional life. Consider asking friends and relatives who went to college about major purchases. The money you save could prove invaluable after graduation.
You Are Not Alone
More than a few high schoolers and college students feel like their parents, and other family members come across as if they know better. Truth be told, older adults routinely made financial debacles they regret and they’re trying to advise you not to make the same mistakes. It may prove useful to ask loved ones to talk about their financial missteps so you can maximize your experience and minimize financial mistakes.