10 financial tips to take before freshman year
There are a lot of things to do when preparing for college—find the school that’s right for you, fill out scholarship applications, register for classes. One thing that often gets overlooked is a discussion on how to handle personal finances. Here are 10 things to do before heading off to college:
Create a budget and set spending limits. Encouraging money management skills will help stay on track. Utilizing various financial software and online resources can also assist in simplifying the budgeting process.
Develop a system for organizing financial documents. It’s easy to get caught up in assignments and social events, but coming up with a strategic way to keep your finances organized will ensure that financial aid deposits are made and bills are paid on time. Deciphering various financial documents can also be tricky, so reviewing the process of reading account statements, depositing and withdrawing money, making payments, and writing checks is also a good idea.
Utilize a bank account to manage finances. Having a bank account either individually, or with a parent, is helpful in keeping track of funds, as well as an easy way to monitor spending and follow a budget.
Discuss ways to safeguard against potential identity theft and fraud. Make sure to protect sensitive documents and information, do not bank online using public Wi-Fi, guard passwords and account numbers, and pick up any mail regularly to prevent sensitive information from getting into the wrong hands.
Research credit cards and how to build good credit. Cultivating good credit-building habits will be a huge help in developing credit history down the road when you want to apply for a job or purchase a home. Discuss paying off credit card bills each month to avoid paying interest or penalties, frequently review credit card transactions and statements, and consider the option of opening a secured credit card to build credit and promote healthy spending habits.
Establish an emergency fund for unforeseen expenses. You never know when something unexpected is going to require additional funds. Having extra money set aside will provide peace of mind if this should happen.
Seek alternative options to manage college costs. College is expensive, but with financial aid, scholarships, and work study options, it’s much more manageable. Not having to worry about footing the bill for everything will also ease some stress and let you focus on what’s really important—your education.
Consider getting a job to earn income for basic expenses. Having some cash flow is always a good thing. Finding a part-time job that provides a little spending money, but doesn’t inhibit your studies, is a great way to help you stay within your budget. Finding a job that relates to your major or career interests is also a great way to gain experience and add to your résumé.
Order a free credit report at least once a year. Now is a great time to make a habit of annually checking your credit report with one of the three credit reporting agencies— Equifax , Experian, or TransUnion. Even if you don’t plan to apply for credit any time soon, it’s always a good idea to stay aware of your credit so you are ready when you do decide to apply for a loan.
Open an Individual Retirement Account (IRA). It is never too early to start saving for retirement or to learn the power of compound interest. When you haven’t even started your career yet, retirement probably seems like the last thing to be worrying about, but even if it is just a small amount of funds set aside in an IRA, you will be thankful when retirement comes along.
Independent Bank asked local kids if they knew some of the differences between credit and debit cards in an effort to show the importance of teaching kids in our communities financial literacy. These are their responses—they might surprise you!
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