College presents a lot of financial challenges to students and their families. There are scholarships to win, tuition prices to consider, loans to take out, debt to repay. Not to mention many college students are financially on their own for the first time, and have to deal with budgets, paychecks, and the like.
That’s why we’ve come up with these 8 important lessons. Check out these tips for college students to save money. Your wallet will thank you.
1. Create a Budget
Creating a budget is the first step towards making smart money decisions. A budget gives you a big-picture view of your income and expenses. It helps you track how much money you have, where your money is going, and where you may need to cut back.
Without a budget in place, it’s easy to overspend and get deeper into debt. When you create a budget, it acts as a reality check.
2. Be Smart About Student Loans
Nowadays it’s relatively easy to get a student loan. However, that doesn’t mean you should breeze through the process. You’ll need to do plenty of research, compare multiple lenders, have a plan, and know your options.
Keep these three tips in mind when taking out loans for college:
Federal First: When borrowing money, federal student loans should be your first choice. They come with lower interest rates and flexible payment plans. Maximize the amount you can borrow by way of federal student loans and only then look towards private loan lenders.
Don’t Borrow More Than You Need: When taking student loans, don’t be tempted to borrow more than you need. Borrow only what you need to cover your basic expenses, no more. The more you take, the more you have to repay—with interest compounded on top of that.
Prioritize Loan Payments: Have some extra cash from gifts or your part-time job? Funnel that into your loan payments while you are still in college. You don’t have to, but paying back your loans early can help you save serious money by way of long-term interest. It will help make life easier for you after you graduate.
3. Start Savings ASAP
Starting a savings account in college is a smart idea. It helps you build an emergency fund to help you through those emergencies that would otherwise drain your savings. Opening a savings account in college also instills smart money habits that will help you in the future.
4. Pay Yourself First
Paying yourself first involves putting a bit of money into savings first, before spending on anything else. Think of it as an investment that will pay you rich dividends over the long term. When you pay yourself first, you may not have much left at the end of the month. However, over a period of time, you will have built a substantial nest egg. The best time to start this habit is now. It’s equally important to be consistent with paying yourself first after every paycheck you receive. It doesn’t have to be a lot; little by little it’ll add up.
5. Keep Applying For Scholarships
Scholarships are a college student’s number one source of free money. Sure, you have to put in the hard work to win scholarship awards. But the effort is totally worth it for several reasons. There is no limit to the amount of scholarship money you can win. Better still, you don’t have to pay any of it back nor do you have to pay any interest on the money. Make it a habit to look and apply for scholarships regularly right through college.
6. Take Up a Part-Time Job
If you have a few free hours every week, put them to good use by taking up a part-time job. Use the earnings to prepay your loans or to fund all those non-essential purchases. This will help keep a lid on your student loan debt.
7. Be Smart About Getting & Using Credit Cards
Getting a credit card is a smart financial decision. It can help you build your credit score, provided that you use it smartly and make all payments on time. On the flip side, credit cards make it easier for you to spend money you don’t have. This can leave you in even bigger debt. Start by shopping around for a student credit card that suits your buying needs.
Once you get your credit card, use it wisely. Make it a habit to track how much you are spending and always pay the balance in full before the due date. This will help you build a good credit history, which will make it easier for you to get a mortgage later on. Keep in mind though that reckless spending and late payments will impact your credit score negatively. Getting a mortgage with a bad credit history is even more difficult than with no credit history.
8. Take Advantage of Student Discounts
Many local and online businesses offer substantial student discounts. Instead of shopping at full-price outlets, patronize those that offer student discounts. From stationery and grocery stores to restaurants, you will find several vendors that offer these discounts. Shopping at these stores is a great way to get what you need while adding to your savings.
Happy saving, students!
If you enjoyed these tips for college students to save money, be sure to check out our other helpful tips in our Paying for College section!