Managing your college finances is one way to make sure you don’t have too much student loan debt when you graduate. It’s hard to believe the way you save and spend money as a young person sets the stage for your future. If you don’t have good spending habits now, here are a few items to get you started.
Start a filing system so you know when your bills are due and how much you owe. It saves time, money and headaches if you keep everything in one place. In your file, keep copies of:
- Bank statements
- Credit card and utility bills
- Paycheck stubs
- Receipts for cash, debit card and credit card purchases
- Loan agreements and other financial documents
- Insurance documents
Set your budget
Where does your money come from? Do you have enough to cover all of your college expenses? Make a table to track your income and expenses. You may receive money from a job, scholarship, student loan or savings account. List these under the income portion of your table.
Under the expenses portion of your table, list the costs of your expenses such as tuition, housing, books, groceries, clothing, entertainment and gas for a car. Also, be sure to include an estimated amount for unexpected expenses; unfortunately, things such as your car breaking down will happen.
Next subtract your expenses from your income to determine if you have enough money to get through the month or school semester.
If you don’t have enough income to cover your expenses, organize them by needs and wants. Cut back on wants to help you avoid overspending and stick to your budget.
Buying and renting textbooks
College textbooks are expensive – the average full-time undergraduate student spends between $1,200-1,400 each year on books. You can always buy new books, but if you’re looking to save some extra cash, you can usually buy or rent books at discounted rates. If you have a tablet or e-reader, look to see if an electronic version is available. E-books are generally half the cost of new, printed editions. Be sure to check your campus announcements for information about student book exchanges – students generally sell their textbooks for less than you would find in your campus bookstore! You can also find books online.
Monitor your checking and credit card balances
Pay close attention to your checking account and credit card balances. If you spend more than you make, you may find yourself having money trouble. Keep your receipts and make sure they match what is listed on your account every month. This is called reconciling.
- Use your monthly statement or online banking record to reconcile the balance in your checkbook every month. Online banking allows you to check your balance more often. If you need help learning to balance your checking account, ask your bank or credit union. There is usually a work sheet on the back of the statement to help determine your balance.
- Always know the up-to-date balance of your checking account.
- Realize the balance you get from ATMs or toll-free numbers may be greater than the actual amount in the account as transactions and checks are not deducted from your balance until they clear.
- Review your credit card statement every month to make sure someone has not stolen your identity and charged on your account.
Be smart with credit
A credit card can make it easy to overspend. If you use your card, you must pay for what you buy. You don’t get a break because you are a teenager. If you spend more money than you are able to repay, you can ruin your credit score, also known as a credit rating.
Businesses may look at your credit score before renting to you, hiring you, making a car loan or giving you a credit card. Credit information will typically stay on your credit report for seven years.
As a student, you can think of your credit report as your credit transcript and your credit score as your credit GPA. The scale ranges from 300 to 850. Credit scores of 700 or more are generally considered to be good. Credit scores are based on your total debt, number of credit accounts including new credit inquiries, the age of the accounts and the proportion of credit card balance to the total available credit card limit.
Be extremely wary of the number of credit cards you take out. Even though you may get a 10 percent discount for applying for a card when you make that purchase, just applying for the card may lower your credit score. It also makes it more difficult to track the cards you are using. You may be more likely to miss payments when you have more cards.
Choose the best credit card
As a young person, you are a prime marketing target for credit card companies. Do your research before signing up for a card to get the best deal. Fees, charges and benefits vary among credit card issuers. Compare these features and select a card that fits your needs.
- Annual Percentage Rate (APR) is the yearly interest rate that includes any fees or additional costs associated with transactions. Avoid paying interest on purchases by paying your balance in full each month.
- Grace period is the time between the date of purchase and the date interest begins accruing.
- Annual fees are charged by many credit card issuers for granting you credit.
- Transaction fees and other charges are added to your bill if you use the card for a cash advance, if you fail to make a payment on time or if you exceed your credit limit.