By now you probably have a job, car insurance payments, and other expenses. You may have had or still have some kind of allowance from your parents. You have at least a savings account and possibly a checking account and an ATM card. These are great financial tools but they don't really mean much if you don't know how to use them.
Before you venture out on your own, show your parents that you know what you're talking about and then walk the talk. College isn't just about classroom learning. It's about becoming an independent adult. The sooner you get a handle on your finances, the greater your financial future.
Budget. You probably hate this word but when you're on your own, there is nothing more important for your survival and for your future. Consider how you will use money. What will you need: textbooks, supplies, clothes, laundry, transportation, food, and of course cash for your all important social activities. The costs of textbooks vary from major to major and even from semester to semester. Talk to some people on campus and try to get an average dollar amount. Have an understanding that some months you may need more for books than others. Try not to spend the extra cash when you have a light semester. You may need it next semester.
If you're going away to school, factor in the transportation costs for vacations and holidays. You may also want to pad your funds a little in case of unexpected expenses like a crashed computer or a flat tire.
Figure out what you will need and then what you can provide yourself if possible. Will you get a job at school? Will your parents provide an allowance? How much? Know your figures before you even talk to your parents and they'll be impressed by your initiative.
Plastic. When you hit campus, you will be bombarded with credit card offers. Banks everywhere rely on your inexperience for their bottomline. Things to consider:
When a person is young and hasn't established a credit history, and has insignificant income, he or she is generally considered a higher risk and is likely to be assigned a higher interest rate.
Don't take the bait. Stay away from these high interest cards and apply for one from your Credit Union before you even leave for campus.
Become an authorized user on your parents credit card account. This will help establish your credit and increase your chances of getting a lower rate card when you do apply for one on your own.
Pay bills on time. Delinquency affects credit.
Remember, credit cards are not substitutes for cash. When you treat them that way, you can get in trouble fast.
Credit cards should only be used for emergencies or for purchases where cash is inappropriate. The balance should be paid in full every month to avoid the high interest payments.
Using a debit card as a credit card can be a good alternative to credit cards when it comes to making purchases and establishing credit. However, debit cards carry more potential risk than credit cards if they are lost or stolen. If you do use a debit card, check your account online or by phone frequently to avoid fraudulent activity.
Save. It may be nearly impossible to save while in school but it is important to get in to the habit. Even if it's a couple of bucks a week, start putting cash aside for big purchases or a bigger goal. Do research. Learn about savings options. Even if you can't take advantage of them now, the more you know, the better decisions you'll make later on.
Going off to school or breaking out on your own can be an exhilarating and scary experience at the same time. The better handle you have over you finances, the less stress you'll have and the more freedom you'll experience. When you do make a mistake - and you will, we all have - learn from it and move on. That's the best education you can give yourself.
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