How to Prepare for College Financially in 5 Steps

One of the keys to succeeding your first year at college is preparation. You have to pack your clothes and toiletries, buy household items like bedsheets and reading lamps and make sure you have a laptop that can handle the note-taking and Zoom lectures for the college classes you’ll be attending. What many new college students overlook, though, is preparing yourself financially.

This is understandable, especially since many college freshmen have had their parents manage their finances up to this point. Fortunately, preparing yourself financially for college isn’t hard. It just takes five steps.

How to Prepare for College Financially

Get a Summer Job

While you might be tempted to spend the summer having fun with your fellow high school graduates before heading off for your freshmen year, getting a summer job will pay off—literally—once you’ve started your college career. This will give you a small nest egg you can use an emergency fund for unanticipated expenses.

If you need to get a job while you’re attending college, you can also use the money you get from your summer job to support yourself while you’re job hunting. You can even take a couple of weeks at the beginning of your college courses to get acclimated to your new schedule before taking on the stress of a new job.

Start Building a Credit History

Nothing can help you reach your financial goals in your adult life the way a good credit score can. A good credit score offers many advantages, such as:

• having an easier time getting approved for loans
• getting better interest rates on loans
• having a better chance of getting a job
• having a better chance of renting an apartment

If you start building your credit score at the beginning of your college career, you'll be able to take advantage of all these benefits once you graduate and start setting financial goals in your adult life

One way to start building your credit score is by using some money to open up a secured credit card, where you put down a large deposit that equals your maximum credit line. You can also talk to your parents to see if they’re willing to open up a joint credit card with you. Just be aware that credit cards can be a double-edged sword, so make sure to pay off the full balance of any credit card debt you accrue each month.

Determine How You’ll Cover Your Expenses

There’s no sugarcoating the fact that college is expensive. In addition to paying thousands of dollars for tuition, you’ll also need to pay for books and school supplies, not to mention meals. Before you go to college, you’ll need to know how you’re going to pay for everything.

The best place to start is by filling out the Free Application for Federal Student Aid, also known as FAFSA. If you meet the federal guidelines, you’ll get some financial aid to help defray your college expenses. From there, you’ll also want to look into different ways to fund your college education, including scholarships, federal loans and private loans.

When you’re doing your search, you’ll want to focus on scholarships first. While they’re harder to get than federal or private loans, you won’t have to worry about paying them back so long as you continue to meet the requirements.

Once you’ve applied for all the scholarships you can, apply for a federal student loan. If your college costs exceed the limits of what you can borrow from the federal government, take out a private student loan to bridge the gap. Keep in mind, though, that private companies often charge a higher rate of interest for their loans than the federal government does, so only use them as a last resort and only borrow what you need to cover the gap, nothing more.

Make a Budget

Once you have an idea of your expenses and any money coming in, you’re ready to put all that information together in the form of a budget. While having a budget might seem boring and restrictive, the truth is that a budget will put you in control of your finances and let you spend money without having to worry about whether that money will be needed for something important.

The process of making a budget is pretty simple. List all your expenses, including college tuition, meals and even entertainment, then list all the income you’ll be bringing in from sources like your summer job, your federal student aid, your scholarships and your loans.

If your income is greater than your expenses, you can use the leftover money to bolster any of your other budget categories. If your expenses are greater than your income, though, you’ll need to figure out the areas in which you can cut back to avoid going into debt. Once you’ve created your budget, all you have to do is stick with it each month, and make sure to review it regularly to make sure it still reflects your current financial situation.

Open an Account at a Credit Union Near Your College

The right financial institution can make your college experience much easier. While you’ll likely have your pick of several banks on and around campus, opt for a credit union instead. While the goal of banks is to make money and maximize profits, credit unions are not-for-profit businesses, which means their main focus is on helping their members.

This difference manifests itself in several different ways. Credit unions almost always have lower fees than banks, for instance, which can potentially save you hundreds of dollars each year that you can put toward college expenses. You’ll also get better interest rates on everything from savings accounts to credit cards. 

Got questions about becoming a credit union member? Ask us!

Prepare for College With First Alliance Credit Union

When you prepare yourself financially for college, you’re not just making your college experience easier. You’re also giving yourself a solid financial foundation that will give you an advantage for the rest of your life.

You can get additional help preparing for college when you become a First Alliance Credit Union member today. You can put aside money for college in a Coverdell Education Savings Account, get help creating a budget in our resource center and even keep track of your finances by using our robust online banking platform and mobile app.