As a college student, you’re quickly approaching the “real world.” Within a few short years, you’ll be faced with the task of managing your own finances – including paying off student loans.
Financial literacy is not often taught in school, and not everyone’s parents prepare them with money management tips during their teen years. Therefore, students and recent graduates often make poor financial decisions that haunt them long after they’ve earned their degree.
If you want to avoid struggling with your finances after graduation, here are some smart habits to develop during your college years.
Understand your student loan repayment options.
According to MarketWatch, the average college student owes nearly $28,000 in student loan debt by the time they graduate. If you’re one of the many students who borrowed money to finance their education, it’s crucial to read the fine print and understand everything you can about your debt and repayment terms, including grace periods, interest accrual, and payment plan options.
Find out what happens if you aren’t earning enough right out of school to make your loan payments, and investigate refinancing options that might make it easier to repay your debt. It’s better to know before you’re faced with hefty loan payments after graduation.
Steer clear of credit card debt.
While student loan debt is common, you don’t need to add credit card debt on top of it. Aside from hurting your credit score, carrying long-term debt can cause a slew of issues in your life, from relationship strains to debt collector calls and even bankruptcy.
Don’t fall for credit card companies that promise low introductory rates for students – these offers are usually predatory, with the provider charging exorbitant interest rates as soon as the introductory period is over. If you do decide to open a credit card, only spend as much as you can pay off in a single billing cycle to avoid accruing interest. This will not only keep you out of debt, but also help you build a solid credit history.
Earn and save as much as you can.
When you’re juggling classes, homework assignments, and extracurricular activities, it can be difficult to add a part-time job to the mix. However, earning any extra money – and saving as much of it as you can – will put you in a better financial position than your peers who don’t work during college. You don’t have to become a barista or grocery cashier, either: Depending on your field, you may be able to find freelance work that will help you earn cash and gain valuable career experience.
When it comes to saving your money, try stashing it in a high-yield savings or money market account so you can earn some interest on your balance. Alternatively, you can use an app like Stash or Acorns to easily invest your spare cash in the stock market.
Budget carefully and avoid impulse spending.
It’s easy to spend a lot on food, drinks, and experiences in college, but you should avoid the temptation to blow all your money on weekend outings with your friends.
Set a strict budget for yourself – including “fun” money – and do your best to plan out purchases like groceries and school supplies. Try to focus on buying only the things you need, rather than novelty items that you want. Then, if you have money left over, you can treat yourself to a night out on the town.
Managing your finances as a young adult with an entry-level salary can be difficult, but you don’t have to live that “broke post-grad” life. Follow these tips, and you’ll be out of debt and on your way to saving money in no time.