As the college semester ends, some students are getting a wake-up call about their finances. When funds run short, students start scrambling to stretch their food budgets or make that last payment on their rent. Some students even resort to selling off some of their possessions to make ends meet.
In many cases, it is possible to avoid these situations. At the same time, a recent study from National Association of Student Financial Aid Administrators found that most students lack basic financial literacy skills – only 40% of those attending 4-year institutions had ever taken a finance course. If you’re struggling to make ends meet, consider this your personal finance 101 crash course.
Minimize Your Debt Load
Student loans have been making national headlines over the past few years, and it’s easy to understand why: they are extremely difficult for many people to pay off, and a lot of students borrow more than they should. It’s easy to justify taking out the full amount offered in the moment for the sake of a little extra cushion to pay for groceries.
The same NASFAA study found that nearly 2/3rds of students surveyed said they expected to take out student loans for their education – but just 15% said they thought they had the information, capabilities, and resources to pay those loans off in the future.
Do whatever you can to minimize the amount of loans you take out. If possible, use scholarships and personal funds to pay for tuition; taking only what you need to pay off the difference. Get a part-time job to pay off other expenses like rent and utilities. Stay on your parents’ health insurance plan for as long as possible, and look for low-income plans like Medicaid if you age out.
Don’t Use Credit Cards
Students are confronted with a lot of responsibility when they first leave high school and enter college. You will likely receive your first credit card offers, but don’t be lured in by their promise of fast cash. Starter cards can have exorbitant interest rates, and students can quickly find themselves in a heap of consumer debt they will find it difficult to pay off. Ignore the credit card offers (for now) and spend your energy creating a budget you can stick to.
Make A Budget
When living on a tight budget, accounting for all expenses is essential. Make two lists: one of (after tax) income and one of all expenses. Include rent, utilities, phone, car, insurance, groceries, and discretionary expenses. Make a budget for things like eating out and stick to it. Students can save money on groceries by checking for local student discounts, using discounts, and buying frozen and canned fruits and vegetables instead of fresh (same goes for meats). Student discounts may also be available through your local student union for car insurance, phones, and more.
College life provides the perfect opportunity to create and sustain healthy financial habits. On the other hand, recklessness during this point can lead to decades of debt and financial worry. By observing some simple personal finance tips, you can minimize your debt load and begin your post-college career confident and financially literate.
Additional Resources:
- https://thecollegeinvestor.com/14588/6-things-every-college-student-know-finances/
- https://www.bankrate.com/personal-finance/smart-money/college-students-best-financial-practices/
- https://www.moneycrashers.com/financial-tips-college-students-save-manage-money/
- https://www.huffpost.com/entry/7-financial-tips-every-co_b_5190749
- https://www.nerdwallet.com/blog/loans/top-financial-literacy-tips-college-freshman/
