6 Tips to Help Students Manage Their Finances
If you’re a college student you may think that financial advice is something you need not worry about until you have some finances. Without earning much money what is the point of seeking out or taking financial advice. But, if you look closely at what you earn and what you spend you will soon recognize that there is enough money coming in and going out to make it wise to start thinking now about your finances. There are a few easy tips to get you started on the path to financial stability and prosperity.
Stay out of debt. This piece of advice may not be possible but to the extent that it is you should try to stay out of or at least minimize your debt. Explore various options for financing college such as scholarships or grants which do not need to be paid back.
Avoid Credit Cards. Again, this one may not seem possible but if you currently have no credit cards, avoid getting them. Many people still advise young people to get credit cards to establish a good credit history. But, this often leads to overspending and a huge credit card debt which does nothing to improve your credit score. Better to have no debt than massive debt you will struggle to payoff for years.
Pay off credit card balances monthly. If you do have a credit card (it should only be one), you should pay off the balance every month to avoid interest charges. If you are planning to make purchases that you know you will not be able to pay off by the time the credit card statement comes in the mail, think twice about making those purchases. DO you really need to spend money that it may take months or years to pay back?
Make wise purchases. More than ever before it is easy for college students to save money on things they need for class. Textbooks are a good example. Before ordering your textbooks from the college bookstore, shop around. See if they are available online and used. It is often the case that you can save quite a lot on your purchases by shopping at Amazon and buying your texts used. Take care of them as well since you will be able to sell them after the semester is over and get more for them online than many college bookstores will give you.
Start investing money now. This piece of advice will sound like the most impossible advice but any money you can begin to save and invest now will reward you immensely in the future. Most college students are not thinking about retirement and figure they can always start investing later. But, the sooner you can begin the greater the payoff. Even if you can only save $50.00 a month, that is better than saving nothing. Put the money into an index fund and don’t plan on removing it for years.
Automate your bills and investments. Finally, what bills you have and the investment you begin should be automated. There are two benefits to this. First, you insure that your bills are paid on time and that you are consistent with your investment. Second, if you automate these procedures you will not be tempted to spend the money on other less important items.
Following these basic steps will insure that you start out with a firm foundation of good money management habits which should last a lifetime. Once you graduate from college you will be in a good position to start your career with little or no debt to pay back, low living expenses, and a good start to your investment portfolio. Keep these habits and you will be on the path to financial security.