Students who go to college are often full of confidence and believe that they have their lives under control. However, once they realize that they are far from their parents’ safe places and by themselves to balance their own budgets, many college students begin to panic and wonder how they are going to manage their own money.
While college students are by definition independent adults, many still have very childish views of the world, especially when it comes to personal finances. As they adapt to being adults away from the constant guidance and protection of their parents, college students can benefit from learning several important money lessons.
Get a job
A student can afford to receive student loans and subsidies to pay for college. In fact, that individual may have hundreds of dollars left over after their classes and books have been paid and deducted from the total prize amount. Even so, that person would do well to realize that excess financial aid for students is not a reliable source of income. In fact, it should not even be considered as income, but rather as a nest of eggs that must be repositioned and used in case of emergency. Income from a job, even a part-time job, apparently low-grade, is more reliable than the dispersed student assistant. When he or she arrives at the university for the first time, that person must get a job immediately.
Live with a budget
It can be very tempting to buy anything and everything you see in local stores and student unions. However, like their parents, college students must quickly learn to live on a budget. They should make a list of their expenses each month and how much money they have left after these bills are paid. That extra amount should be the amount they live in instead of the total amount they earn or earn each month.
Opening a savings account is something that most college students do not contemplate. They are too tempted to spend their excess cash and then wait for the next amount of money to be sent or deposited in their student bank accounts. However, saving while you are in college can help students learn an important lesson for a lifetime. Savings are vital to a person’s financial health. Saving 10% of your money while you are in college can provide you with money to live during emergencies, pay unexpected expenses or start early to save for a house or a retirement.
Show restriction with credit cards
College students are bombarded with new credit card offers once they arrive at school. However, they would do well to realize that they will not need more than one or two credit cards at their disposal. Having too many cards can accumulate the amount of debt you owe and put stress on your personal budgets. They can also sink their credit ratings. Having one or two credit cards and using them in moderation can help them build solid credit scores and allow them access to credit in the future.
Despite having a meal plan in the dormitory or in the union, most students still do a fair amount of grocery shopping on their own. Buying impulsive items and expensive name brands can be tempting. However, buying things for sale and staying within an established supermarket budget can help students increase their budget and save money for later.
It’s never too early to start investing. College students have a great opportunity to establish themselves as financial powers from the start if they take advantage of the opportunity to invest while in college. Buying CDs at your student bank, investing in low-cost mutual funds or even setting up an IRA can be a great way to learn how to invest and start generating money for the future. Few things look more impressive in a young person’s mortgage application than the fact that he or she has been investing for years before applying for a mortgage loan.
Buy life insurance
Your parents can already have insurance policies on them. Even so, college students must buy their own life insurance policies while they are at school. These policies will be much cheaper because these people are young, healthy and less likely to be involved in bad habits such as smoking. These policies can also be used later in life if they need to borrow money against their policies for emergency expenses.
Learn financial self-sufficiency
Most college students ask for money from mom and dad from time to time. However, falling into a regular pattern of borrowing or borrowing money is detrimental. Students must learn to be self-sufficient and avoid borrowing money that they may not be able to afford later.
These financial lessons are vital to the financial well-being of a college student. Learning these steps in advance can help you become a responsible and fiscally successful adult.