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Get Organized
When shopping for “back-to-school” supplies or dorm furnishings buy a small metal file box and file folders. Label the folders with headings appropriate to your situation. For example: "bills due," "bills paid," "checking account," "college information," "financial aid," "receipts and warranties"; however small they may be, save them in the box.
- You may want to look for a checking account that has low or no fees, is conveniently located, and perhaps even has special rates for students or young adults.
- Make sure you understand how important it is to write down every check in the check register and subtract the amount from your balance.
- Never write a check for more money than you have in your account. Banks will charge $20, $30, or more for each returned check, and bounced checks will hurt your credit record.
- Remember that bank statements and canceled checks should be kept for five to seven years.
- Finally, make sure you understand electronic funds transfer and know the difference between a debit card and a credit card.
Set Up a Spending Plan
Put together a monthly spending plan that lists anticipated income and expenses. Try to budget money over several months by planning for a large expense, like cash for nights out, textbooks, gas or car insurance, so that your money can last longer.
Get Financial Aid for Private School or College
Students can apply for scholarships and other financial aid even after their freshman year. Visit the financial aid office at your school to learn what's available. The Internet also provides an easy way to get free, current information about financial aid. Some Web sites to check out: College Board (www.collegeboard.org), FastWEB (www.fastweb.com), National Association of Student Financial Aid Administrators (www.finaid.org), Sallie Mae scholarship service (www.salliemae.com) and U.S. Department of Education (www.ed.gov). However, even though most loans are an investment in the future, many students spend years repaying them. Don't borrow unless you absolutely need the money. Still, it's far better to take out a low-interest federal student loan to pay for tuition than to put it on a credit card. The interest rates on credit cards can be rediculously high!
Start Saving
It’s never too late to become a saver. If you can cut back on your spending even a little and put the money into a savings account or an investment like a mutual fund, you may be astonished at how quickly your money can multiply!
Find Fun Alternatives to Expenses
Try to become a smart penny-pincher. For example, buying a movie ticket, popcorn, and soda can easily add up to $14, compared with renting a video for $4. E-mail costs less than calling long distance, and second-hand stores are a great place to find bargains on furniture and sports equipment.
Also, you must consider the difference between what you want to buy and what you need to buy. Everyone is guilty of indulging and it can be a healthy release from time to time. Just be sure to splurge infrequently and on the right things. Try to shy away from major purchases like electronics or designer clothes as well as expenses that create a need for other purchases, (ex. buying a pet and then having to buy food, toys and treat) before you are sure that you can afford it.
Find Out If You Have a Spending Problem (tips from William L. Anthes, PhD)
Do I compare my possessions to those of other people?
Do I feel inferior to someone who has the things that I don't have?
Do I feel better when I buy something?
How long does the better feeling last before it wears off and I need to go out and buy something new to refuel the good feeling?
Be Wary of Credit Cards
Seventy percent of undergraduates at four-year colleges have at least one credit card. 20% of students who carry balances on their cards have debts of more than $10,000.
Many colleges and universities allow banks to promote their credit cards on campus in return for millions of dollars in payments.
These banks offer everything from "free" T-shirts to duffel bags if students will apply for a card.
Chances are you will have a credit card at some point. Try these tips from Dr. Anthes:
1. Have only one general credit card.
2. Shop around for a card with the lowest interest rate and no annual fee.
3. Avoid low teaser rates that shoot up in a few months.
4. Avoid cards that charge a one time processing fee.
5. Look for a card with a 20-to-30-day grace period (the amount of time you have to pay the bill before interest is charged for the purchase).
6. Use your credit card for a cash advance only in cases of real emergencies. Cash advances are very expensive because you will usually be charged a higher interest rate with no grace period, and interest will be charged immediately.
7. Pay more than the minimum balance each month, or better yet, pay it off in full and avoid interest charges altogether.
If you pay a minimum of $10 a month on a $500 balance and the interest rate is 18 percent, it will take almost eight years to pay off the balance, and you'll pay $440 in interest ($940 in all). Up the payment to $30 a month and you'll pay off the debt in less than two years and pay only $100 in interest.
The Importance of Insurance
An uninsured medical emergency can devastate a family financially
If your possessions at school or at home aren't covered by your homeowners' insurance, shop for renter's insurance.
Remember that the law requires auto insurance, but that liability insurance costs less than full coverage and usually is adequate for an older car.
Manage Time Effectively to Make Money
Taking part in social events, hanging with friends, and holding down a part-time job can all be a part of becoming an adult. But the job that will pay off the most is going to school. "Over a lifetime, the gap in earning potential between the high school diploma and a bachelor's degree or higher exceeds $1 million,"(Anthes).
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