Money-Savvy Tips for Students
Last month, we reviewed how to read financial aid award letters. This month, we are covering money-savvy tips that are useful for any teenager or young adult transitioning to college. Money will play an important role and so it is important to understand how to use it in our favor!
Track Where Your Money Goes
This is a simple, recommended activity that can have many positive benefits. Grab a notebook and start listing any money spent, including the date, total amount spent, and what was purchased. At the end of the week, or month, you can add up your purchases by categories (coffee, eating out, snacks, movie dates) and see where the majority of your money is going. Then, you can come up with easy alternatives to your bad money spending habits, such as deciding to do rental DVDs and at-home popcorn versus going to a movie theater.
Establish a credit history
Sometimes, students think they are being “smart” by waiting until they graduate from college to apply for credit cards. This can come from a multitude of reasons but the most common that I've heard is because their parents taught them not to owe money so they avoid credit cards altogether. However, waiting until you graduate college to start looking for a credit card means you'll most likely be only offered ones with very high interest rates or denied altogether for having no credit history.
To start early, I recommend that parents consider adding the student as an authorized user to one of their credit cards. Parents doing even have to physically give you the card for your to now have a credit file in your name, which helps you in the long run. Once you have a credit file or card in your name, it's important to get into the habit of checking your credit score. Sites like Credit Karma are free and great for this!
Start a savings or checking account
Opening a bank account can teach students how to make regular deposits, keep track of money, and keeping their account balances far from overdraft charges early on in life. Online banking and smartphone apps developed specifically by these banks also makes account management easier for the younger generations who are used to using their phones for everything! As you get older, find a first job, and start saving money, a checking account becomes a good option as a place to hold enough money that you will be using to pay your monthly fees – ie. Phone payment, car payments, book purchases etc. However, if you are saving up any additional money apart from what you usually spend on necessary purchases, a savings account also becomes a good option as you can earn interest on the amount of money saved there.
With a checking account, and money coming in and going out, you will need to know how to write a check, especially if the school you are attending uses checks for scholarship awards or reimbursements. Here is a very easy to follow activity that will help you know exactly where to write what.
Tips To Save:
Use your Student ID. As a college student, you can get discounts for a lot of purchases you may not have previously considered. For example, Amazon Prime waives the annual membership fee upon proof of college enrollment. Anytime you buy anything – on and off campus, and even online – ask if there is a student discount.
Another great way to save is to utilize coupons or mobile phone applications (Target's Cartwheel app is a great example of this) for everyday purchases that you can find at lower prices. Sometimes a simple online price comparison or knowing that items are on sale in upcoming days might mean having to wait longer to make purchases but usually means scoring bigger savings.