In order to build financial stability in life, college students will need to learn topics that extend beyond the foundational requirements of their major. Being smart with money is at the top of that list, and college is the perfect time to instill good behaviors and avoid falling into debt.
Financial literacy is something that all students should be taught for several reasons. It teaches the importance of a FICO score and how it relates to every potential loan or credit card approval in the future. It also helps teach smart budgeting, which is something that many college students will need to learn as they navigate their way through life.
To build a budget, it’s important to divide expenses into categories. The fixed expenses are the ones that stay relatively constant such as rent, meal plans, and tuition. There are also semester-specific costs such as textbooks or supplies that need to be accounted for. Whatever is leftover is called discretionary income and can either be saved or used for leisure activities such as entertainment or dining out. The advice for sticking to a budget is the same as the initial steps in a weightloss program. Document everything. Until it becomes second nature, it can be too easy to skip recording a little here and a little there, until you are surprised at the end result.
Having zero credit is not the same as having good credit. Start creating a positive credit history by opening a checking account with a debit card and by always staying above the minimum balance. By avoiding penalties, you will steadily build up a history of reliability and consistency that future lenders need to see. While it may be tempting to use a credit card in college, it can be very easy to fall into the trap of “buy now, pay later”. Debit cards deduct automatically from your bank account, making every purchase feel more real. That being said, responsible use of a credit card is a great way to increase your credit score. Choose one that is best for college students, since they often have low-interest rates and/or perks for signing up.
Having a student ID is a great way to take advantage of discounts and promotions, making it much easier to save money. Make sure you take the initiative to inquire about any ways to save money throughout your college years since you won’t be able to use your ID after graduation. Not only will this give you stronger financial stability in your years after college, but it will also instill great money-saving habits for the rest of your life.
This blog/website is only made available for educational purposes. It is designed to give visitors general information and a general understanding of select financial topics. It is not intended to provide specific financial or investment advice. Conduct your own due diligence or consult a licensed financial advisor/broker before making any and all financial/investment decisions.