For many people, heading off to college is the perfect time to learn financial basics. Because you can experience the real world while parents oversee from afar, it’s a safe time to learn all there is to know about personal finance. Budgeting, how to manage your credit score and developing savings habits begin to show up in your day-to-day life in different ways.
If you’re headed back to school, why not use this opportunity to study more than just your coursework? Learn to take control of your finances before the student loans come into play. Here are a few tips for how to become more financially savvy this semester.
College Students: Find a Side Hustle
Though it can be an exercise in time management, the money you make at a side hustle will help offset some of the common costs for college students. This can help you pay off debt and ensure that you have a little extra cash on hand.
Find out if your school has a work-study program or work part-time in restaurants or retail. Maybe you can even support your future by finding a paid internship. A college job won’t last forever, but the money lessons you learn from those paychecks can help your financial literacy. Take advantage of this opportunity to learn all about how to handle your paychecks and stay on top of your finances.
Manage Your Money With a Budget
In a world filled with textbooks, tuition, and meal plans, managing your money can be challenging. It’s never too late to start budgeting, though the sooner you begin your budgeting journey, the better off you’ll be in the long run.
This starts with a simple inventory of how you’re spending your money. Perhaps this starts with identifying fixed costs like housing bills, music subscriptions, and gym memberships. Or, maybe you want to start by setting aside funds for groceries, restaurants, and the occasional drink. Wherever you start, the plan for how to spend your money more efficiently next month is a great place to finish.
Budgeting is especially tough if you’re focused solely on your education, making funds fairly limited. Having a job makes it easier, but not everyone has the time available, and not all internships are paid.
Luckily, there are plenty of helpful tools available for setting up a budget. You can go old-school and keep track with a checkbook, notebook, or spreadsheet, or give an app a shot. It may not be perfect, but the point is that you start budgeting sooner rather than later.
Student Loans: Be Wary of Tuition Costs
Tuition is expensive. If you aren’t careful, student loan debt may become problematic after that graduation date. While there is no shame in taking out federal and personal student loans in order to get a higher education, you should definitely compare rates and ask for support from experts.
Many students defer payments on student loans until after they graduate. However, waiting to pay will increase the amount you will be required to pay once you are a postgrad. Even with an entry-level job as soon as you graduate, it’s important to be mindful of student loan payment schedules as you get closer to graduation day.
Apply for Scholarships
It’s helpful to also apply for as many grants and scholarships as possible. Since they don’t have interest rates and do not have to be repaid, scholarships and grants can help offset debts. They’re typically based on merit or may have GPA stipulations, so it’s important to read the fine print before applying.
Be Responsible with Your Credit Card
When done right, credit cards can be extremely useful. Before you open up a credit card, do your homework. Shop around for the best deal by comparing different attributes such as:
- Interest rates
- Rewards points
If you have a repayment plan, building credit smartly is a great way to spend your funds You may not be ready to purchase a house or car today, but it’s likely that you’ll want to make big purchases like these later on down the road. Having a good credit history and by extension, a good credit score comes with good money habits, even those started in college.
Opening a credit card in college is common, and it’s a great tool for building credit if you’re good about paying it down each month. Parents recommend that credit cards should be reserved for emergencies, such as car troubles. In most cases, their recommendation is correct – but those emergency costs will need to be paid back too, and interest will rack up if you don’t have a nest egg for a rainy day.
If this is your first time as a credit card owner, start with an account that has a low limit. Remember to always pay your bills on time and avoid maxing out your cards. This will allow you to build up a solid credit history and make big-scale purchases in the future.
Taxes for College Students
As a college student, filing taxes can be complex. And if you’ve never filed for taxes before, it can seem almost overwhelming the first time. But, if done right, it should be a good way to get a nice chunk of funds that you can leverage for emergencies, trips, or bigger camps.
But, the question starts a step back, do college students even need to file taxes? The answer is that it depends. Students who earned an income of less than $12,000 a year, which is the standard deduction, aren’t required to file a tax return. So unless your paid internship or part-time job add up to that amount, you may not be eligible to submit your taxes. But, they may still want to file if they had income taxes withheld on their paychecks.
If all of these money-saving tips are coming too late, you may have an uncomfortable amount of debt from college expenses alone. Thankfully, our credit coaches can help sort through financials and help. If this sounds like you, reach out today.