Too many students are graduating in the red and facing difficult financial choices when they are just starting out. Take steps to avoid this by focusing your attention on five areas that have the potential to influence your financial future. As long as your essentials are covered—rent or room and board, food, tuition, books, supplies—you can still enjoy your college years. Putting off some of your wants until you’ve got your first real job (and real paycheck) may be necessary in order to abide by your budget. Still, if you can make a little room in your budget for fun, do so! When you’ve made a plan for the money you have, you can rest easy knowing your priorities are covered. It’s not always easy to live on a college student’s budget, especially if you’re paying your own way. But by setting realistic limits on your spending categories and then sticking to them, you’re setting yourself up for good spending habits. Start by saving for your tuition each semester or quarter. You may be working primarily summer jobs, or just part-time, but paying toward your tuition now can really make a difference in the amount you may end up borrowing, which will help you later when the payments and interest come due. Work on saving up an emergency fund as well. This will help you cover unexpected expenses or medical bills, should they arise. Depending only on credit to get you through an emergency will cost you in interest and fees. While you are an undergraduate, you may want to buy a car; consult your budget and your other transportation options to see if that makes sense for you. And while you may be tempted, you should likely hold off on purchasing a home or condo. You may have to move as you start your career. Consider choosing more affordable college housing options to help save cash as well. Another option is to spend your first two years locally at a community college to complete your core curriculum courses, and then transfer to the school of your dreams to complete your degree in the major you’ve selected. While probably not the ideal solution if you’re longing to be on your own, this option could save you and your parents a bundle. However, be sure to check with the school you plan on transferring to so as to make sure that all of the credits you complete during your first two years will be accepted. Remember that you will have to pay back every penny you borrow plus interest. Not only that, but interest capitalization increases the amount you owe. Furthermore, you can’t get out of student loans easily, and they will not be automatically forgiven or discharged, in a bankruptcy. This is debt that will follow you around, so borrow carefully. Credit card debt is one area where many college students make a mistake. That’s because using cards can be tough to navigate when you’re just starting out—and you don’t want to learn about fees and interest the hard way. Credit card companies work hard to get college students to sign up for a card while they’re still in school because they know it’s common for students to run up balances quickly before they really understand all that a credit card entails. To use a credit card responsibly, make sure your purchases are accounted for in your budget before you put them on your card, and pay the balance in full each month before the due date whenever possible. This will help you to avoid late fees and interest, which will quickly eat into your budget. If you choose to work only during summers, make the most of your summer job. Consider picking up extra shifts in order to stash a little extra away. You might also take an internship—if it’s a paid one, you’ll combine an income with real-world experience. You might opt to work full-time and go to school part-time to avoid going into debt. While it makes for a very full schedule, this work experience can help you as you plan your transition from school to the workplace.
