School has started once again, and this year many newly-graduated students will form the freshman ranks of colleges and universities across the world. Being new to college life and campus living is a challenge that brings with it the opportunity for character building through establishing responsibility and maturity to live in the adult world. Of course, it also involves educational and career development. But what many new college students (and their parents) fail to realize is how crucial this time is to developing good financial habits. The financial decisions, whether large or small, made by college students (especially in their first year of ingraining habits) can have a tremendous affect on an adult’s life post-college and into their career.
Giving financial advice to college students doesn’t always go over well, especially when young adults have so many other things on their mind — the new social settling, navigating campus life, and passing their classes. Of course, some lessons have to be learned the hard way, but parents should still give their college student good advice and direction for avoiding common financial pitfalls. Here are a few common personal finance tips for new college students you can pass on to the students in your life.
Your education is money: use it wisely.
College is expensive, and it’s only getting more expensive. Students are usually forced to rely on financial support from family as well as grants, scholarships, and federal loans. However an education is financed, much of it is borrowed or gifted. It’s sad to say, but many young college students skip class and needlessly fail entire courses because they fail to respect the financial obligation involved. Unlike high school, funded by tax payers (still not free, if you think about it!), every failed course costs money. You pay for classes whether you pass or fail, and if you have to repeat them or pay for extensions due to laziness, it’s costing you, and will continue to cost you in the form of student loans for years to come, regardless of what you get out of it. Personally, I’d rather be paying off student loans for an education I put to good use rather than for one I wasted.
Living off credit cards and loans will come back to bite you.
Student loans often exceed the amount of tuition. Although excess funds are encouraged to be used for school-related expenses such as textbooks and other materials, some students give into the temptation to spend them on luxuries, such as fancy laptops, tablets, and phones, or even cars. Although the ‘use’ of such things for college is used to legitimize the purchases, this is unnecessary debt. Using student loans exclusively for needs and rolling over or returning excess funding is a better way to emerge with a minimum amount of college debt.
Many college student also use credit cards (either their own or their parents’…shame on you!) to fund not only school-related expenses, but daily living. Because full-time students are sometimes unable to work or only a few hours a week, living expenses can become difficult to fund. Some credit card debt may be inevitable, but caution is necessary, because credit card abuse could become a scar on your credit report for many years to come, and keep you from being able to purchase larger items, like a home.
Convenience is costly; shop frugally.
Campuses are designed to cater to the every need and want of its students and professionals, including on-campus toiletries, food, and other supplies. Books are one of the most costly necessary expenses, but can be purchases used or loaned instead of brand-new with a little extra effort. Shopping for household supplies and food at a department store instead of campus, where it is likely over-priced, may require a weekly trip, but will save tons of money throughout your campus stay.
Learning all the little ways to save money while a dependent college student will not only make a student’s loans and credit card debt more manageable after graduation; it establishes good financial habits that will impact the rest of financial life.
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