Be Smart with Your Money
Learning to save what you earn and be responsible about your purchases will help keep you out of debt. Some debt, like student loans, may be unavoidable, but by saving now instead of spending at the mall you can minimize what you’ll owe later. The earlier you start saving, the more you’ll have when you need to make an important purchase. Even if you don’t think you have money to save, you can still make smart spending choices to ensure you graduate college with as little debt as possible.
How to make smart spending choices
Budget
Budgeting doesn’t have to be painful. Creating, and sticking to, a budget is one of the best things you can do to keep your finances worry-free. By developing a realistic budget and following it every month, you’ll be able to build a good credit record by paying bills on time and staying out of unnecessary debt. Here are some ideas on how to reduce your spending:
- – Housing: Consider your living situation. Could you save money by having more roommates? Living on the coolest street in town may be fun on Friday night, but is it worth the increase in rent? If you have your own apartment, look into on-campus housing options that may be more economical. If your parents live close to your school, consider moving back home for a year. It may not sound like fun, but if it could reduce your money stress, it may be well worth it.
- – Transportation: While having your own car may be convenient and cool, is it really a necessity? If your school is in a rural area, can you catch a ride to class with a friend? If your school is in a city, consider taking public transportation. Selling your car may allow you to cut your monthly spending and put aside some money from the sale. Just think—no more scalding leather seats or shoveling out snow-covered parking spaces!
- – Everyday spending: The little things really add up. Reduce your daily spending on food, coffee, magazines, CDs, etc. Reduce your monthly expenses on cable TV, Internet access, a gym membership, cell phone plan, etc. Your school may offer free or less-expensive options for things like the gym and Internet access. If not, call the companies who provide these services to you, and ask if they have less expensive alternatives. Shop around for a better deal, but beware of getting locked into a long-term contract.
Credit Card Caution
Developing good money management habits now will serve you well for the rest of your life. Most college students have credit cards and many get into trouble by charging high balances that they can’t repay. Carrying a balance for everyday purchases is never a good idea, regardless of how low your interest rate is. Here’s a quick example that should make you rethink a buy-now, pay-later mentality: you’re shopping with friends, and you want to purchase a shirt on sale for $35, but you don’t have the cash to afford it this month. “No problem,” you say. “I’ll just charge it!” On a credit card with 10% interest - which is a fairly low rate—if you charged that shirt today and carried the balance on your card for 5 years before you paid it off in-full, that $35 sale shirt would cost you almost $58. At 20% interest, closer to what most retail store cards charge, the shirt would cost you almost $95. Not such a good deal after all.
Jobs—Working While You’re a Student
Working while you are in college can be a great way to earn some money, build your leadership skills, and gain real work experience that can build your resume for the future. Working can also take up valuable study time. If you are not sure you can balance your school work with a job, you may want to hold off on working until you get a better handle on your school work. If you are working out of financial necessity, try to find a job with flexible hours where you can find someone to cover for you if you need to devote time to school work or one where you choose your work hours.
