If you’ve got a college-bound child preparing to fly the coop in a few days, go ahead and show them this blog right now. This week’s entry is aimed at them — how to help them start school on firm financial footing and avoid the leading cause of dropping out. You guessed it: financial struggles.
Okay, soon-to-be-college student, I’ve got one word for you: budget. Whether you’re paying your own way, getting a full ride or something in between, now that you’ll be living on your own, you’ll have to live within your means, no matter what they are†.
Know what you’re starting with. My first day on campus included a trip to the credit union to set up a checking account. My modest balance was a combination of graduation money and earnings from my summer jobs. I went in thinking it would last me at least a semester. I barely made it to midterms! Basing expenses in reality and having a sound financial institution† as a partner can make all the difference.
Know what’s coming in. Income could be from a scholarship, a part-time or full-time or work-study job, money from Mom or Dad, grants or loans, or withdrawals from your cash reserves. It doesn’t matter. This is what you’ll be living on, so, handle with care.
Expect the unexpected. I have a friend who in her first semester had her car battery die in a metered parking space in her dorm parking lot. Six parking tickets and a tow later, she was out more than $300. Regardless of your income, your budget should include setting aside a certain amount each month for situations like this. Believe me, they will inevitably happen.
Be careful with credit. If they haven't already, the credit card companies soon will be swarming in to sign you up. Sadly, I've seen too many college kids fall into a credit hole before their freshman year is over. No matter how tempting (or necessary) it may seem, now is not the time to start playing with plastic†. It can be a devastating slippery slope.
Understand needs versus wants. Pizza or laundry? Sweatshirts or software? You probably know which is more important. I’m not saying wants aren’t. You’re a college student, after all! Just make sure your needs (like the phone bill, rent, food, etc.) are covered in your budget.
This is a great time in your life and a great way to learn a little about how the real world works. Don’t be afraid to ask questions, and try to soak up all the financial knowledge you can.
It may take a year or two for you to get, but this first year is so important, especially the first semester. The sooner you can learn the value of the dollar, the better your chances are of succeeding academically and financially. Take it from someone who’s been through it.† The two go hand in hand.
<< Previous | Next >>