Are you off to college in the fall? Congratulations! Would you agree that independence, football games, fraternity/sorority parties, making new friends and being able to eat pizza every night are some of the things that come to mind? The freedom that comes with being a college freshman is undoubtedly a thrilling feeling and with freedom, comes responsibility.
At 18 years old, you are not expected to become a financially independent, responsible adult at the wave of a magic wand; however, this is where setting the right financial foundation starts . . . and it starts now!
The Freshman 8 of Managing Money
Have you applied? Scholarships are a great way to offset the financial burden of college tuition. Look into scholarships offered by the university as well as local organizations; if you qualify, apply! Scholarship applications are typically fee free; therefore, there is no harm in applying.
The cost of college tuition can seem overwhelming, but there is financial assistance out there for you. By filling out the Free Application for Federal Student Aid (FAFSA®), you will be informed of the federal student aid available to you either in the form of grants, scholarships, work study, or a federal student loan.
Only borrow what you will need. Consider the cost of tuition, student housing and your student meal plan when taking out a loan.
Why a federal student loan? Unlike a private loan from your bank or credit union, a federal student loan offers a fixed interest rate that is typically much lower than that of a private loan. Some of the additional perks of a federal loan include: deferred payments until after graduation, tax deductible interest, no prepayment penalty/fee, loan forgiveness and a number of repayment plans.
Recently, an article was published on CNN highlighting the story of one family’s struggle to pay off $200,000 in private student loan debt following the passing of their daughter. To read the article, click here.
3. Sign up for student checking and savings accounts at bank or credit union in the area. By doing so, you will have access to (depending on your financial institution) local ATMs, free checking/savings accounts, free checks and the ability to withdraw money without being charged a hefty fee!
4. Take advantage of credit opportunities!
Starting to build a credit history now is important but be sure to manage credit wisely. Your credit limit is not a spending goal for you to reach. Use plastic to purchase what you can afford to pay back when your bill comes due. By doing so, you will avoid high interest fees that can accumulate quickly. In addition, avoid late fees by paying your bill on time!
5. Create a Budget . . . and stick to it!
Let’s face it, the first month away from home you will most likely frequent a local coffee shop, order pizza right to your dorm room and spend a little money on going out with your new friends. Quickly your budget can be blown! Reevaluate your spending after the first month or two by saving your receipts, even if it is just a cup of coffee! By seeing where your money has gone, you have a better understanding on where you can cut back.
Textbooks are expensive! Consider utilizing online book borrowing websites, such as chegg.com, for a reduced rate. Websites such as Amazon.com also offer a more affordable alternative than your campus bookstore. At the end of the semester, take the time to sell books you will no longer need either to the bookstore or in a private listing online.
7. Set Spending Limits.
Not sure if you should buy that handbag or smartphone? Ask yourself, “Do I really need this?” If not, walk away.
Last, but not least . . .
8. Avoid hitting the snooze button and go to class! You are paying for it – might as well get your money’s worth!
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Written By: Amanda Keefe