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Labor Day is now behind us and the freshmen on campus are finally starting to find their way around. Recently asked to provide some thoughts to freshmen, I started thinking about what I could have done as a first-year student. There were many choices I could have made that would have helped me better prepare for earning a living for myself four years later.
Start paying attention. Being a Saver relies largely on a single concept: don’t spend more money than you have.
Before you spend, think about the source of your money. Is it coming from an allowance, a job or decreasing savings? Draw up a budget to manage your cash flow. Budgets aren’t that exciting, but once you start thinking about your financial situation – listing your income and your expenses – you won’t be surprised when real life arrives.
Enhance your bank accounts. If you attend college away from home, open a checking account at a local or online bank. Link the account to a high-yield online savings account so you can let your excess money earn interest. Get in the habit of monitoring your accounts online once a week and use free online software to track all of your financial accounts in one place.
Get the right credit card and use it the right way. Ignore the credit card booths at freshmen orientation with the free tee-shirts and Frisbees. They probably come with a high interest rate buried in the fine print. It’s OK to establish credit, but make sure to get a card with a manageable rate and a low credit line (say, $500)to help you keep your spending in check. If you carefully manage your credit card charges and make your payments on time and in full each month, getting a card as a college student helps puts you on your way to having a long credit history. This will help you when it comes time to qualify for a mortgage or other loans you might find necessary down the road. But if you don’t trust yourself to be frugal with your charges and make timely payments, skip the credit card for now.
Spend less money or no money for everything. Buy your course materials online ahead of time rather than at the campus bookstore to save money (which comes in handy in your bank account or on Nacho Night). If you have a meal plan, take full advantage of it. When you must buy food, acquire a taste for Ramen Noodles. Ask for a “student discount” on everything! Check your library for books, movies and music. Check out some local music at the campus quad. It may be noisy, but it’s cheap. I guarantee you can find 4 years of free entertainment.
Earn more money where you can. Giving up 1 or 2 hours a week to tutor a local high school student can keep the beer money flowing. Work in the library – you may be able to study for your courses at the same time, earning money while you study. Once you start earning money you qualify for opening a Roth IRA, a great move for a college student because there is a long time for that money to grow before retirement. Even if it’s just a few dollars each paycheck, a Roth IRA contribution is the first step toward giving yourself a chance of being financially secure later in life.
Living like a college student means you might have to forgo some luxuries. The new car and the spring vacation to Cancun can wait. At least ‘til you’ve earned and banked some money. But when you can pay for these things with a clear conscience without going into debt, you’ll be able to enjoy them so much more. Not only that, but graduating and starting the rest of your life on the right foot will help you significantly on the path to financial independence.
This is a guest post by Flexo who writes for the personal finance blog Consumerism Commentary.
Tags: College, Consumerism Commentary, Saver
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Excellent post. It’s always a good idea for young people to open a Roth IRA. The early you start your retirement savings plan, the better off you’ll be in the long-run. Another piece of advice? Run your life like a business. Constantly push yourself to cut expenses and increase revenues. Review your financial standing on a quarterly basis. If you hold yourself accountable, then you’ll end up in a good place.
‘Keep the beer money flowing’ for /freshmen/ age students? Really?? In more parts of the world reading this than not freshmen age students are not legally allowed to drink. This is really bad advice.
And encouraging credit cards from a bank who’s core belief is saving! I understand you offering the product but saying ‘make the payments’ rather than ‘pay it off in full each month’ is kind of bothersome.
Chuck, you’re right about the “beer money” comment. I would not suggest anyone break the law.
In regard to your second point, the article does say, “… make your payments on time and in full each month.” Establishing credit as early as possible will save money — a core interest of this bank or any other — when it is established properly. If paying on time and in full each month is not possible, credit cards will do more harm than good, but they should not be ignored.
I found food and drink to be small expenses that could add up really quickly in college. For those who can drink, limit trips to the bar as much as possible; it’s an expensive place for a beverage. Same goes for coffee shops. Once meal plans are optional, start cooking for yourself on a regular basis instead–it’s probably the best bet for eating healthy and staying on a budget. Don’t know how to cook? Learn from your parents or friends right away; stick with the simple stuff before getting ambitious with multicourse meals.
Ahh, come on, Chuck. Flexo’s being realistic, not handing out bad advice. I’m not suggesting anyone break the law, but thinking that it should be ignored entirely is another point altogether. The fact of the matter is that a lot of college freshmen drink regardless of the legal drinking age, and they spend money on booze just as quickly as they spend money on clothes. You also have to consider that the blame doesn’t rest entirely in the freshmen– there’s someone over 21 buying the alcohol, isn’t there? Maybe the emphasis should have been on the “when you’re 21 and legally allowed to drink…” but I think addressing it early is a valid (though controversial, I admit) point.
Don’t forget to budget for gas money to come home, especially if you live in-state and plan to visit often. I know tons of college students who still come home for local football games, to see friends, or go to church on Sunday.
-NCN
[...] Be the Big Saver on Campus. This article is a guide for first-year college students, known vernacularly as freshmen or frosh. I don’t remember thinking about money at all when I first entered college, but if I had I probably would have been in a better situation when I graduated. [...]
[...] Be the Big Saver on Campus. This article is a guide for first-year college students, known vernacularly as freshmen or frosh. I don’t remember thinking about money at all when I first entered college, but if I had I probably would have been in a better situation when I graduated. [...]
[...] Be the Big Saver on Campus! Posted by admin September 29, 2009 As the new school year begins, many new freshman tackle handling finances for the first time. This article posted in Consumerism Commentary has some great advise for starting out on the right foot! http://wethesavers.ingdirect.com/young-adult-money-sense/consumerism-commentary-guest-post-be-the-bi... [...]
Ing needs to alllow us to type in a memo or note against a transaction. This way when I come back in weeks from now I will know what that transaction actually meant. Now I have to go look at the memo at the souruce / target bank account to understand what the transaction was actually for
ING needs to alllow us to type in a memo or note against a transaction. This way when I come back in weeks from now I will know what that transaction actually meant. Now I have to go look at the memo at the souruce / target bank account to understand what the transaction was actually for
nYr50e Excellent article, I will take note. Many thanks for the story!