Student Credit Cards
How To Manage Your Money
Most people have heard about the high student loan debt for college grads, but did you know that students today also have more discretionary income than ever?1 Just because you have money, that doesn’t mean you should spend it. If you’re not keeping track of all your money, you should be. Learning to manage your money in college will make your eventual student loan repayment that much easier, and hopefully, less costly.
Follow these easy steps below to get finance-savvy fast!
Create a Budget
Developing a budget may seem like an obvious first step, but it's an extremely important one for many reasons. Budgeting allows you to control spending, build good habits, prioritize your spending, and save money. Creating a budget early on will pave the way for a better financial future. Follow the steps below to create your personal budget.
- Identify your current spending habits - Do you have monthly bills you can plan for? Or do you buy a latte every morning before class? Determine what you typically spend money on regularly so you know how much to budget for. Make sure to factor in a little extra for miscellaneous expenses, because in college, these things happen.
- Set goals - Are you saving for a trip? Do you want to pay off your student loans early? Setting goals will ensure that you're not only spending less, but that you're not spending more than you have.
- Track your spending - Once you have your goals set, make sure you stick to them! Make adjustments as needed, but remember that goals are in place to help you save or limit spending.
If you have a hard time tracking your spending by hand, you should check out an online tool or smartphone app like Mint.com. Mint allows you to track your spending automatically, and you can create budgets as you need them. Check out the video below to learn how Mint can help you.
Build Your Credit
Once you’ve created your budget and are a saving machine, you should think about the future of your finances, and this includes your credit. A good credit history will get you better rates on your future credit cards and mortgages, and some employers will even look at your credit history as part of your background check – yikes! If you have little or poor credit history, that’s okay – there are ways to improve your credit.
Not sure what your credit score is? Check your score for free.
If you’re like most students, you may have a limited history. This is one way student loans can help. When you enter repayment, pay your loans regularly and pay at least the minimum. You can even make payments while in school to both lower your debt upon graduation and build your credit early.
Additionally, credit cards are a great way to boost your credit while in school, as long as you can pay them off every month to avoid those pesky interest rates. If you responsibly manage your debt, your credit report will reflect your good habits.
Avoid Unnecessary Debt
The only thing better than paying off your debt is not having debt in the first place. Student loans may seem like a great way to pay for a few “extras” while you’re in college, but are more detrimental in the long run. If you don’t need them, don’t take them!
A $5,000 Stafford loan with a 6.8% interest rate will cost $6,904 over the standard 10-year repayment term (maybe more with other payment plans). Worth it? Sometimes yes, sometimes no. Student loans are a necessary part of paying for college for many students, just use them wisely.
Being smart about money in college will set a foundation for a strong financial future. If you budget, build credit, and borrow wisely, you’ll look back and be glad you did!
- Manage your money with Mint.com
- Check your credit score for free
- Learn about your student loan options
- Find out about tax benefits for education
- Calculate your monthly student loan payments
1 O'Donnell & Associates' "College Student Spending Behavior"