College is an exciting time, but it’s also an expensive undertaking. According to collegescholarships.org the average accumulated student loan debt is between $26,000 and $100,000.
It’s important that parents prepare their college freshmen for their money choices, just like they would prepare them for other life decisions. Before they head off to school, make sure your college student knows these tips that will allow them to enjoy the college experience at the lowest possible cost.
KNOW YOUR FINANCIAL AID OPTION
Be proactive about taking control of your finances before you even get to school. You need to educate yourself about all the possible loans and scholarships available. Research all the university specific scholarships you may qualify for in addition to anything related to your major, organizations and hobbies.
If you must borrow money, use federal subsidized loans as opposed to high interest private loans. Remember to borrow as little as needed and don’t use loans to pay for your lifestyle.
Also bear in mind that some college “expenses” aren’t necessarily mandatory. Is commuting an option instead of paying the high cost of living on campus? Can you cook your meals instead of purchasing a meal plan? Learn to be creative and think out-of-the-box.
BUDGET, BUDGET, BUDGET
Get control of your money flow by documenting your income and expenses and then put together a plan before you need to use it.
Write down your known expenses such as tuition, books, meals, housing, utilities and transportation. Compare that total to your income. From there determine if you need to increase your income, if you need to reduce your expenses or if you will be fine. If any funds are left over determine how much will be set aside for savings and entertainment.
Use a system to track your daily spending that will work for your lifestyle. Take photos of your receipts, use a mobile app that is connected to your bank account, use computer software or go old school and create a spreadsheet.
Know yourself and be honest. If you struggle living within your budget try the “envelope” system. Put cash in separate envelopes for each budget item. When you run out of cash – you stop spending.
STEER CLEAR OF CREDIT CARD
Avoid Credit Cards at all costs. Part of the college experience is developing life skills that you will build upon the rest of your life. Learning the importance of delayed gratification will be key to starting your post college years debt free. College life is all about being creative and living frugally. Learn how to have fun without spending money. How creative can you be?
When you are finally financially stable with a solid new career, do your research before you apply for a credit card. Compare offers, interest rates and penalty fees. All credit card companies are not created equally.
FIND A BANK THAT WORKS WITH YOUR COLLEGE SITUATION
Determine if your banking needs as a college student are the same needs you had as a high school student. Some banks offer accounts with reimbursement for out-of-network ATM fees and a low minimum daily balance requirement. Other banking features may include mobile remote deposit capture, online bill pay and person to person payments.
PLAY UP YOUR STUDENT DISCOUNTS
You will never be more eligible for discounts until you are a senior (citizen) so take advantage of all your student perks. Students can use all sorts of benefits with their campus ID, from discounts at local restaurants to a percentage off that new laptop you need to get for class. Before you make any major purchases, like a computer or an expensive set of paints for your art class, ask the retailer about student discounts.
FIND DEALS ON BOOKS
The campus’ bookstore is the most expensive place to purchase books. Instead try borrowing your books for free from the library, or buying books using Amazon.com, Ebay.com, Half.com, and selling them back at the end of the semester. This will leave you with a lot more money in your pocket now and later.
GET A JOB!
Getting a job in college will be one of the most important decisions you make during this time of your life. Not only will you save on college debt and expenses but you will learn time management skills. You will also be putting yourself ahead of the competition when you finally graduate because you will be building your resume and learning skills needed as you research and interview for your career.
DON’T FORGET WHY YOU’RE IN COLLEGE – NETWORK FOR YOUR FUTURE CAREER
Find ways to meet with professionals in and out of your planned industry. Buy them a cup of coffee, get to know them and spend time just listening. Work on getting 1,000 connections on LinkedIn before you graduate. No financial advice could be more important than getting a lot of LinkedIn connections because the quickest way to secure a job is all about who you know, and not totally dependent on your GPA.
At Kuderer Financial we help families prepare for upcoming events that will require adjustments to budgets and spending. Contact us if you or your college student need specific advice for your individual situation.