Welcome to college! If you’re reading this, then I have a feeling that you’re entering the next chapter of your life with a little trepidation. The pressures of college can be overwhelming: new classes, new friends, and the looming question of how (and if) you can afford all those cool things that your friends are always talking about. It doesn’t help that many people graduating from high school don’t have the same opportunities as other students when it comes to landing a job or managing their bank accounts. But no matter what stage of life you’re in, there are ways to make smart financial choices while still enjoying yourself at college—starting with these five tips:
Start Saving as Soon as You Can
The earlier you start saving, the more you’ll have. The power of compounding interest means your money will grow faster when it’s invested early and left alone for a few years. If you start investing at age 25 instead of 35, for example, and earn an average annual return of 7%, by retirement age 65 your nest egg will be worth about three times as much: $1 million, rather than $300K by waiting until later in life. If you’re looking to learn more about opening a high-interest savings account, Lantern by SoFi offers a ton of valuable information on this important financial topic.
That’s why it’s so important to think about saving for retirement before focusing on college savings–the money from these two accounts could end up competing with each other for investments during their respective growth periods if they’re not managed properly upfront.
Consider Taking Out Student Loans, if Needed
Although student loans can take a while to pay off, they can be a good idea if you are struggling to find the funds upfront to finance your college education. Before taking out loans, consider what type of loans you’re looking for – federal or private – and make sure to do research on what student loan interest rates each lender offers.
Get a Job, No Matter What Your Major Is
A lot of students think they’re going to be able to focus solely on their studies, but that’s just not possible when you’re also trying to figure out how you’re going to pay for college. It’s important to get some kind of income while in school to provide you with living expenses throughout your time on campus. Working a part-time job while in college also provides you with an additional means to socialize and meet new people at your school.
Be Smart With Your Credit Card Usage
Credit cards can be a good way to manage your money, but they can also become a huge financial burden if you’re not careful. If you use credit cards responsibly and pay off the balance each month, they can help build your credit history and establish a payment history. This will help when it’s time for you to get loans or mortgages later in life. However, if you don’t pay off those balances each month (or at least try), then all this good work will be undone by having high interest rates attached to them!
Think About Whether or Not You Want to Buy a Car at College.
While a car can be useful for getting around campus and exploring the area, it’s important to consider whether or not you want to buy one. If you do decide that buying a car is right for your situation, then think about how much it will cost in the long run; this includes how much you can afford for your initial car payment, and any monthly payments that might incur as well, such as gas, parking, and tolls. If buying a car is something you really do need in college, then consider second stream income ideas – such as tutoring or being a campus tour guide – to bring additional money into your bank account. You can also look into leasing a vehicle if you only expect to use your car for a short period of time.
You might not have the same opportunities as other students graduating from high school, but don’t let that keep you from making smart financial choices!
While it’s true that millennials are facing tougher economic conditions than those before them, there are still plenty of ways for students to save money on college. The key is staying organized and keeping track of where every dollar goes.
If you’re a college student, you probably have a lot on your plate already. But don’t let this keep you from making smart financial choices! Remember that your future is in your hands, and if you make smart decisions now they will pay off later in life when it comes time to pay off those student loans or buy a car or house. The key is starting early: start saving as soon as possible, get a job no matter what major or career path you choose (even if it’s just babysitting or working at an on-campus store), and think about your long-term plan to pay off student loans (if you decide to finance your education through that route).
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