If you’re going to college, you won’t be surprised to learn that you’ll be learning a lot, from academic coursework to how to live on your own. One of the biggest things you’ll have to learn, though, is learning how to manage money. The importance of this cannot be overstated—the sooner you learn to manage money, the less likely you’ll be to fall into debt and the better chance you’ll have of achieving your financial goals in life.
However, managing finances when you’re on your own for the first time can be intimidating, especially if you don’t have a lot of prior experience. Fortunately, managing money isn’t hard, and the following steps will help you crush personal finances like it was introductory English.
Open a Checking Account
The first step every college student should take to crush money management is to open a checking account at local bank or credit union. This might seem unnecessary, especially if you already have a checking account, but opening your own account will give you the opportunity to choose an account with the features you want. In other words, you’re taking ownership of your finances.
Speaking of features, you’ll want to make sure that any checking account you open at least gives you a debit card. You’ll also want to make sure the bank or credit union has a good online banking platform or a mobile app. Finally, make sure you understand what fees your bank or credit union will charge.
It’s worth pointing out that credit unions have a lot of features that make them an attractive option for college students. One of the most attractive features is that credit unions almost always have less fees than banks, and many of them don’t charge fees for using their ATMs. Even better, many universities have their own credit unions, so the member experience advisors have a lot of experience helping students.
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Monitor Your Student Loans
If you’re like most students, you’ll have to take out student loans to pay for your college education. That means you’ll be leaving college owing thousands of dollars. Fortunately, you won’t have to pay it off until you’ve graduated and started your career, but you should regularly check on how much you’ve borrowed while you’re in college.
Admittedly, nobody likes thinking about the money they owe, and it’s understandable if you’d prefer not to worry about how much you’ve borrowed until you’ve graduated college and gotten hired. However, you need to know how much you’re borrowing. It will give you some valuable perspective on the cost of your education, and it will give you some incentive to plan out what you’ll do after you graduate, whether you want to be in IT, accounting or sculpting.
While you’re monitoring your student loans, you might also want to familiarize yourself with how much interest you’re being charged, the types of repayment plans your lender offers and what to do if you encounter financial hardship. Knowing all this information beforehand will help immensely once you need to start making payments.
Create a Budget
If you rolled your eyes at this, you’re not alone. A lot of people think that making a budget will force them to live a boring life where they never get to spend their money on anything fun. The truth, though, is that making a budget while you’re in college will get rid of a lot of financial stress and let you spend money on the things that really matter to you, whether it’s getting football tickets or saving up for a new laptop.
Creating a budget is pretty easy. First, list the income you have, whether it’s from a job or financial aid. If you’ve gotten a lump sum through financial aid, you’ll want to divide it up between the months you’ll have until your next financial aid payment comes.
Next, list all your expenses for the month, then add them up. If the total of your expenses is less than your income, you’re all set. If the total is greater than your expenses, though, you’ll have to reduce your expenses until they at least match your income. Focus on the categories of your budget where you can control the expense, like restaurants, clothing or entertainment.
Once you’ve created your budget, the advantages will be obvious immediately. When you spend money, for instance, you won’t have to worry about whether you’ll have enough left for your necessary expenses, like food. You’ll also be less susceptible to impulse shopping, and instead spend money on the things that really matter to you.
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Get a Part-Time Job
Colleges and college towns have a lot of jobs available for students that are a great opportunity to bring in extra income and get some work experience for your resume. They won’t be glamorous jobs by any stretch of the imagination, but you’ll at least be paid for your time.
No matter what job you get, make sure it won’t interfere with your class schedule. You might also want to talk with the manager of any job you’re considering to make sure they’ll be okay with you taking some time off to study for exams or work on important projects.
Get a Credit Card
A credit card is a great way for you to buy things you might not otherwise be able to afford, and it’s a great way to build up your credit score while you’re still in college. In order to do that, though, you’ll need to know how to select a credit card and use it responsibly.
Credit card companies love to promote the various perks their cards have, but the most important features of a credit card are its annual fee and its monthly interest rate. Make sure you select a credit card that doesn’t charge you an annual fee and try to find a card that charges the lowest possible interest rate.
Once you’ve chosen your credit card, you can get used to it by making some small purchases and then immediately paying them off. After that, however, make sure you don’t charge anything to your credit card that you don’t have a plan for paying off, such as already having the money in your bank account or setting up a budget category dedicated to paying off your bill.
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Ace Personal Finances 101 With First Alliance Credit Union
Managing your personal finances for the first time can be a bit scary. However, if you make a budget, keep an eye on your finances and make sure you’re not spending more money than you bring in, you should be fine. You can even get a credit card to give your finances an extra boost, so long as you use it responsibly.
You can also give your finances a boost when you become a member of First Alliance Credit Union. You only need five dollars to set up an account, and you’ll get access to all our services and products, including the My Money tool in our online banking platform, which will show you where you’re spending money each month.