The semester is well underway and it is a pretty exciting time for all the college freshmen. While many are navigating their new campus environment, learning how to live independently without their parents, and creating social circles, some others are busy wondering how to manage their own finances. The college experience has become a synonym among young people assuming a graver responsibility for handling money, away from the reliable security of their parent’s wallet. Not everyone can properly handle money and since college life is the time to taste financial freedom, many start misusing their dollars. They are the ones who soon end up in credit card debt or student loan debt.
College students should actually learn the art of living on a budget if they don’t want to see themselves drowning in a sea of debt. You should keep in mind that the key to financial success is remaining aware of how you’re spending your money. Learn the difference between being cheap and spending savvy. Here are some valuable tips to follow by college students who are looking forward to setting their future.
1. Create a frugal budget: This is one of the most important points to keep in mind. List down the sources of your monthly income including wages, savings, allowances from parents, and then jot down the predicted expenses for a specific month. Although it’s not too easy to recognize college living expenses, still you should try. Include costs like school supplies, food apart from your regular meal, laundry care, and personal care items. Without managing your budget, it is impossible to track your expenses and stay within a limit.
2. Differentiate wants from your needs: Is a $40 a week for gas a ‘want’ or a ‘need’? What exactly should you budget for non-planned food? How much should your laundry cost you? Once you spend a few months on a college campus, you will get to know the exact expenses and then find it easier to differentiate between wants and needs and put your plan into action. Don’t indulge too much in ‘wants’ as they can be done without. Focus more on your needs.
3. Don’t abuse your credit cards: In the year 2014, 85% of undergraduate students owned at least one credit card, as per research by the International Journal of Business and Social Science. College should be actually considered as the best time to start building credit but at the same time, it is very easy to accrue huge amounts of debt while in school. It is vital to understand the striking difference between overextending and credit building.
4. Do your research on financial aid and loans: College graduates usually face a tough time while balancing their ever-growing education loan delinquencies against their declining income. You need to understand the right size of student loan debt and what it may amount to after graduation. Not only that, you should come up with a plan to repay it on time. Even if that may mean staying with your parents for a short span of time, you may even do that to repay your debts.
College education can be expensive if you don’t know how to manage your money and loans properly. Student loan debt is currently the most talked-about topic in the finance industry as it has already reached an alarming level of $1 trillion. If you don’t want to follow the herd of students saddled with student loan debt, be sure about taking the right financial steps. Don’t forget to save money to move ahead and reach your financial goals.
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