People have different motivations to attend college. College attracts people for many reasons, such as getting an education, the college experience, and furthering a career. The journey from college student to graduate involves years of work. If you watch your finances and keep your debt as low as possible, you can exit college further ahead in life.
COVID’s negative impact on the economy has made smart finances even more important for success in life. This article will give six simple but critical ways to manage your finances. None require any special advantages in genetics or personal connections. Keep your head on straight, and remember you’re playing the “long game” in life.
1. Apply for scholarships early
Financial planning is making good decisions, period. Start making those decisions now, even if you are still in high school. If you need or want easy scholarships to help pay for your education, you’ll want to start applying for them no later than the summer before your senior year.
When applying for scholarships, aim for the ones best suited for your strengths. If you enjoy writing and you’re good at it, look for essay scholarships. As the name implies, these scholarships put a lot of weight on your written essay. Conversely, if you don’t enjoy writing, look for no essay scholarships, where no essay is necessary.
2. Establish credit early
Your credit score used to only matter for banks and home loans. Now, renters, potential employers, and pretty much any business entity you can think of now looks at credit scores.
Start building your credit score by getting a credit card or two. The key with credit cards is being careful how you use them. Ideally, only use them for emergencies. Student loan debt may be unavoidable after you graduate from college, but credit card debt is easily avoidable.
Use your cards sparingly and pay off the balances each month. While it’s true that bad credit is better than no credit, don’t burden yourself with any more debt than necessary.
3. Start a budget
Part of your financial success with credit cards or any kind of loan is to start with a budget. Look at your finances. Determine how much money you have coming in and your monthly expenses. Keep your spending below what you have coming in, and you’ll never get into trouble.
To start a budget, look at your expenses that are the same each month. Car payments and rent are examples of monthly expenses where the amount is the same for each payment. Those expenses are easier to plan.
Then look at your expenses where the dollar amount fluctuates each month. Examples include food, utilities, and (depending on your spending) credit card bills. To account for these fluctuations, look at the last several months and calculate an average.
Finally, look at the money spent not tied to necessities. These would include gym memberships, trips to restaurants, cell phone bills, and television streaming services. If you are trying to reduce your monthly expenses, are there any of these you can reduce or cut completely?
By starting with a budget in place, you’ll be able to eliminate any frivolous spending that may get you into trouble. You’ll also be starting good habits that will serve you well into adulthood after college, where things like mortgages and families make your financial stakes much higher.
4. Determine where you can save money
Once you have a snapshot of your expenses, look for creative ways to save money. If you have a used car that keeps draining your bank account because of costly repairs, it may be time to sell it and save a lot of money. If you rent an apartment off-campus, look into your college’s dorms to see if you’ll save money there.
A simple way to save money is with an online shopping cart extension, like the one offered by Capital One Shopping. These extensions, once installed, search out coupons and discount codes and inputs them into your shopping cart when you’re ready to complete a purchase. You don’t have to do anything, making an extension an easy way to reduce your expenses.
5. Start a side hustle
If your schedule allows for it, you can start your own business. Many businesses, especially online opportunities, require much less work and expense to launch. What kind of business should you start? Look at your strengths and interests.
If you are a math whiz, you can easily become an online math tutor. What about social media? Even experienced savvy businesspeople sometimes struggle with social media. If you love social media, look into ways to make money with Instagram.
6. Consider an income-driven loan
If you’re looking at the likelihood of massive tuition debt once you graduate college, you may want to consider alternate loan options. A method of financing college tuition that is gaining in popularity is income-driven loans. These are based on your earnings after college. The amount you pay each month goes up or down, depending on your income.
Look at the facts before you commit to them. These loans have a lot of attractive qualities, but they don’t fit every person’s financial situation. If you get married, for example, your spouse’s income will be factored into future payments. Even if your income doesn’t go up, your payments will because of your spouse’s income. The good news is that you can always refinance the loan if you have repayment problems. The first step would be to research and compare the student loan refinance rates among different companies.
If you want to ensure your financial success as a college student, start planning early. Seek out professional advice from a CPA, attorney, or even guidance counselor before you make any firm decisions. With some planning and creativity, you can use your time in college to start some positive financial habits that will benefit you for the rest of your life.
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