As you’ll soon discover, your freshman year in college is nothing like your senior year in high school. Many of the decisions you make as a freshman today will either profoundly enhance or significantly stifle your opportunities in the future. Of all the different challenges, distractions, and responsibilities vying for your attention and time as a freshman, one of the most important areas of your life that demands thoughtful, regular attention is how you manage, spend, and save your money. If you can consider these 3 tips before you pull out your credit card or cash to make any purchase, you will have enough money saved up and excellent credit in your future to skip through those rainy days and unexpected storms in life.
Use credit cards for emergencies ONLY
If your car suddenly breaks down, you can use your credit card to cover the expense. Gasoline, fast food, fine dining, pizza deliveries, unnecessary clothes, and impulse purchases are NOT examples of emergency purchases that would warrant the use of your credit card. Always act “as if” you don’t even have a credit card; it is only in your wallet as a type of insurance when you can’t pay with the cash that you earn from your job (remember: you are not using the funds from your refund check for daily, frivolous purchases!)
It’s not what you earn, it’s what you save that matters. If you earn money by tutoring other students, walking dogs for the resident homeowners, or working at the campus bookstore, save more than you earn. If you make the commitment to place more than half of what you earn into your higherone.com account, you’ll save both your earnings and any potential banks fees or loans you may be charged from another account.
Fiscal responsibility demands discipline and an ability to look beyond the immediate gratification from mindless spending. Among your friends, be the designated driver, but don’t be the designated “I got this one!” spender. Getting into poor spending habits at a young age can really put you on the wrong path leading to financial troubles down the road. A credit card isn’t a free pass, and that money is going to come from somewhere eventually. That is an important fact to remember the next time you are taking your credit card out of your wallet.
Pay prior commitments FIRST
If you personally receive a student loan refund check that you are able to cash and put into your own bank account or you have that money sent to your bank automatically from a student financing company such as HigherOne , SLFC or Sallie Mae use that money – immediately – to pay off your student loan, current classes, textbook expenses, and other necessary college items. Whatever the amount is – remember it is given to you, in trust, for a very specific reason. It’s not meant to be used to go on a shopping spree with your friends, to treat everyone at the local college pub to a round of beer, or buy video games. Use it only for what it is being given to you for.
Dennis McKenzie is a well established writer on finance for many different blogs all across the web. He loves to travel and is often found reading or working on his classic car