Guest Blog Article
Written by: Kristen Mcmahon
College is about the time you discover that managing your own finances involves a lot more than just watching your spending. As current college students, you have to learn to prioritize, especially if you don’t live in a dorm, this is likely the first time you have to pay your own utilities, rent, groceries and any unexpected costs.
Start Saving Now
Maybe your goal upon graduation is a new car, moving cross country or getting a decent apartment. You’ll reach them quicker and easier if you start saving now.
If you’d like to buy a new car, you may want to wait until after graduation. There are dealerships that offer financial incentives and rebates to recent grads. College students need to avoid spending all your cash on recurring expenses but not leaving a margin for those that crop up a few times a year, such as car repairs. This is known as “fire hose management’ where you rely on your credit card to get the car fixed. This usually kicks off an avalanche of interest charges and fees, not to mention a fair amount of stress.
Set aside money ahead of time for your sometime expenses. Consider directing at least 5 percent of your take-home pay every month into a savings account for at least six months to build up a reserve. Then, after a year or so, you’ll know more precisely how much you need to save the next year.
Pay off Credit Card Debt
If you find yourself carrying a balance on one or more credit cards, use a credit card debt calculator to get a handle on what that will actually cost you. Credit card interest adds up quickly, and it makes sense to pay off credit cards as soon as possible.
Calculate Student Loans
Another major post-graduation expense for college students is paying back student loans. To make sure you pay those on time, create a spreadsheet. For each loan, record the name of the lender, contact information, loan ID number, current loan balance, interest rate and the date the first payment is due. Repaying your student loans on schedule helps your credit profile immensely, and not doing so hurts you, especially when you’re ready to make your next major purchase using credit.
Start a Budget
To find out how much money you’ll have available to spend each month after your student loan payments are made, try developing a descriptive budget. This involves tracking all of your expenses, no matter how small. Record receipts for every purchase or payment in an expense-tracking app such as Digital Receipts or Expensify. Categorize all your expenses, including groceries, dining out, insurance and entertainment. At the end of the month, you’ll be able to compare your actual spending with your income and make adjustments as necessary. It may be annoying to build a budget, but not doing so puts you on a path of possible deficit spending from which you may not easily recover.
Brand College Consulting offers personalized assistance with financial aid and scholarship processes, including for high school students, current college students and graduate students.
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