Straight-A Personal Finance
College is full of learning experiences: first serious relationships, living away from home, 15 page research papers, and the freedom to follow your own schedule, just to a name a few. But of all the education and life lessons we get in college, financial lessons are too far and few between.
The average student graduates from college with $25,000 in debt, and that is true for traditional students and online students alike. So many people, teachers and parents included, are so focused on students getting a “good education” that they neglect to teach students some basic skills that will be valuable for the rest of their lives — such as lessons in personal finance.
Graduating with such a steep amount of debt means that managing finances in other areas becomes significantly more important, and many students are ill-equipped or ill-prepared to face the challenge that personal finance poses. For students (and parents of students) here are some of the most important personal finance lessons to be learned before graduation comes along:
Use credit wisely
I couldn’t tell you the number of students I’ve met who opened a line of credit and then maxed it out, leaving a heap of debt to pay off on top of any student loans they might have.
Let me first say that there is nothing wrong with having or using a credit card. In fact, getting and using a credit card will help you begin building a credit history and will boost your score, giving you freedom later in life to make large purchases, such as cars and houses — if you use it wisely.
For students this primarily means not carrying a balance on the card at any time. Limit your credit card use to purchases you would make anyway, such as food or books. Any money you spend with a credit card has to be repaid at the end of the month so don’t spend more than you have, and always pay off your balance in full every month.
Save when you can
As a student it is difficult to make money, and even harder to save it. This is partly because students often aren’t making any money, but also partly because any time they do have some they spend it frivolously.
Keeping money in a savings account is imperative for your financial health, both now and later. No matter where the money comes from (unless it’s loan money) you really want to get in the habit stashing some in a bank. The next time you get a paycheck, or a gift from your Uncle Larry, put some in a savings and keep it for a rainy day.
When you graduate and are looking for a job, that money will be a lifesaver. You may not need to use it (and with any luck, you won’t) but it is always better to have it there than to not.
Take out only what you need
Anymore it is almost impossible to graduate without taking out at least one loan. If you have to borrow money, make sure that you only borrow what you need.
It’s very easy to overestimate what you will need, or to be blinded by the fact that you getting money to spend, but the fact remains that you will have to pay that money back after you graduate, and the more you borrow, the more you will have to pay back, and the longer you will stay in debt. So take out only what you need, and make due.
Find work if you can
The benefits of working while going to school are myriad, and too numerous to completely list here. Suffice it to say that, in addition to having some pocket money — which keeps you from spending the money that’s in the bank, or using that credit card in excess — working while going to school will also teach you extremely valuable time management and life balance skills that will be useful later as you look for a job.
Plus, any work you do can go on your resume, which will really make the transition from college to work life that much easier.
Take a course
You’re in school — take a finance course! If you are totally oblivious to anything with money, it will definitely be in your benefit to take a class on personal finance to get yourself up to speed. You can even enroll in online courses for less money if you can’t work it into your schedule at school.
Whatever you do, just don’t leave college without having learned something about money!
This guest post is contributed by Angelita Williams, who writes on the topics of online courses. She welcomes your comments at her email Id: angelita.williams7 @gmail.com.