Personal Finances for College Students
Unless you’re seeking a degree in accounting or a similar field, you probably don’t want to spend a lot of time thinking about personal finance. If you’re headed off to college, you’re probably looking forward to a new social scene or the classes you’ll take and not balancing your check book or filing your taxes. All the same, there are plenty of reasons it’s important to be savvy about your finances while you’re in college.
One reason it’s important to be smart about money in college is that the sooner you start practicing good financial habits, the better off you’ll be later in life. The decisions you make now about savings and debt can reverberate for years to come.
Another reason is that by starting with good habits now, you’ll be in a great position by the time you graduate and get out into the working world. Unlike some of your peers, you won’t spend that first year or two after college floundering financially as you learn how to budget responsibly.
Paying for School
The foremost financial concern on the minds of many students is how they will pay for school. Scholarships, grants and loans are all sources of money for college. If you don’t qualify for much federal aid, private student loans are also an option.
While you may have heard that you will need a cosigner if you are young and do not have a substantial credit record, this is not the case with all private lenders, and you should take a look around to find lenders who will work with you. You should be able to find options for both graduate and undergrad students.
You’re told to take out loans to pay for school, but avoid debt. You might feel like you’re getting contradictory information. However, it’s important to keep in mind that student loans are a little different from other types of debt, such as credit card debt. With student loans, you are getting a good return on your investment in a college education in the form of higher lifetime earnings, which offsets that debt.
It’s common for college students to be inundated with credit card offers, and it can be tempting to put things like clothes, dinners out and vacations on the card and worry about it later. However, it can be easy to get deep into debt this way, and you could spend years after college digging out.
Personal Finance Basics
With all of that in mind, there are a few basics you need to be aware of. First, you should make a budget so you know how much you can spend each week or each month. This will save you from being in a situation when the end of the semester is weeks away and you’re broke. There are apps online that can help you in creating a budget. Some will track your spending to help ensure that the budget is more accurate.
If you’re working while you’re in college, you will need to fill out a tax return each year. For most students, this is a relatively easy process, and you can use software to help you. While you might not have to file taxes if your income is below a certain amount, you may be getting money back from the government, so it is probably worth your while to do so. Finally, consider putting away a little bit of money in savings, even if you are on a tight budget and it is only a few dollars a week. Money that you invest wisely early in life can compound impressively over the decades ahead.