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How To Manage Your Finances While In College. A Student Guide
You’re heading out on your own and you’re excited about it. You should be. This is likely to be the best time of your life. However, that’s only if you do it right. You’re going to need to make a lot of wise decisions, especially when it comes to finances.
Avoiding Financial Trouble
College students have a tendency to get themselves into a lot of financial trouble. This is expected because new freedoms tend to coincide with impulsiveness. The good news is that you can still have fun without getting into financial trouble. In fact, you can have fun while being fiscally responsible, which can lead to you being way ahead of the game after you graduate. Below are five key ways to manage your finances while in college.
1. Establish A Budget
When you read the word ‘budget,’ it probably doesn’t drum up excitement. This is something most people don’t want to deal with. In this case, you don’t need to worry about that. Establishing a budget is much easier today than it was in the past. That’s because there are several high-quality personal finance apps that will track your spending, balances, and credit. Most of these apps are free.
It’s highly recommended that you download a free personal finance app. When you leave home and live on your own, you’re going to find your expenses going up, and you won’t know how to handle it if you don’t have a plan. A free personal finance app should be part of your plan.
When you use an app like this, you’re going to love seeing good news, and you’re going to hate seeing bad news. There are ways to consistently see good news without sacrificing enjoyment. For instance, if you live on campus, then you don’t need a vehicle with you. There will be no sense in spending money on gas and maintenance. You can walk or use a bicycle. Public transportation might be another option, but those costs add up as well. Other expenses will include rent and utilities. Rent will be your biggest hit, but if you work a part-time job, you should be able to cover your rent without a problem.
2. Pay Off Student Loans
Approximately 70% of college graduates are saddled with student loans, and the average amount of money owed is $35,000. That’s a lot of money to pay off, especially when you include interest over the years. The first key here is to always pay at least double the minimum, preferably more. If you don’t do that, the interest will catch up with you. You should strongly consider an aggressive payment plan.
Having a part-time job will also play a role. Rent will be your priority because it’s real-time, but a portion of every paycheck should go to paying down this debt. This can all get complicated, but that’s why budgeting is so important.
3. Pay All Bills On Time
It’s imperative that you maintain good credit so you can buy a car and/or a house in the future. It’s also likely that a potential employer will check your credit. In order to make sure you’re paying your bills on time, set up automatic payments. This will force you to make sure you stay ahead. Think of it like a game where staying ahead is winning.
4. Pay Yourself First
This is something you probably won’t read anywhere else, but it’s a highly effective strategy. Every time you receive a paycheck, set up your accounts so 10% of what you earn automatically goes to your savings account. This is before paying bills, debt, or taxes.
This payment to yourself is Priority #1. By doing this, you will accumulate more money in your savings than you possibly could have ever imagined. The best part is that you never have to worry about stock market crashes or anything like that. It’s your money and nobody can touch it.
5. Have Fun
Believe it or not, you will still have money left over. That’s assuming you create a plan for your budget. While these financial rules are keys to your future, they don’t mean you should sit in your room on a Friday night and watch re-runs of classic television shows so you can save money. A college budget should be designed so you can enjoy yourself without being irresponsible. Financial responsibility is important, but nothing is more important in life than experiences. If you can have both, you have won.
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