With summer fast coming to a close, many once high school grads are about to declare “independence day” as first-year college students. Along with increased freedom comes increased responsibility. You can offer a helping hand by sharing these 10 top financial tips with your favorite college student:
- Whether you are paying your way with a part-time job, student loans or receiving an allowance from your parents, it is time you take control of your money by setting up a budget. The best way to do this is by using a software application such as Mint.com. This software downloads, categorizes and graphs all of your spending automatically every day. You’ll know where you’re spending without spending any effort!
- As soon as you get to your school, open a checking account. Many college-town banks offer free checking for students and some may even offer $25 to $50 to open an account. If available, be sure to get overdraft protection. This feature allows you to avoid expensive fees for bounced checks. You don’t plan to bounce checks? I hope not but get the coverage just in case! Also, choose a bank that has convenient ATM locations so you won’t be paying fees when you use another bank’s ATMs. Be sure to keep a running balance of all expenditures, including ATM withdrawals. This will help make certain you don’t have bounced checks!
- Class text books can cost you hundreds of dollars…or not. Once you know what text books you’ll need, do an online search for discount new books or used books. Amazon.com is a good place to start but there are many other sources as well. At the end of the semester, you can then sell your books online and recoup part of your costs. One of my associates sold a $170 retail book for $70.
- Get in the habit of saving some money each month. This is perhaps the most important habit to establish if you want to become wealthy once you venture into the real world. Even if you are saving only $25 to $30 per month, this is a great start. Have your bank set up a money market account for this purpose and have the funds automatically transferred from your checking account each month. This automated system is the key to creating consistency in your savings program. If you have earned income, a ROTH IRA is an excellent choice.
- If you are renting a house or apartment, you should realize that your ‘stuff’ is not insured. This includes your TV, sound system and furniture. If you want to protect these items from fire or theft, you will need renter’s insurance. This coverage is not expensive and should cost you no more than $100 per year. Choose replacement cost coverage versus actual cash value. If your sound system is stolen, replacement cost coverage will allow you to buy a new system whereas cash value coverage will only reimburse you for the value of your ‘used’ system. Contact your parent’s property and casualty agent first. In one case they added the child’s renters insurance for free. Another source for free quotes is www.rentlaw.com.
Next week, I’ll complete this discussion with the remaining five financial tips.