Money, or the lack thereof, can be a major issue for college students. For some, money disappears much quicker than it appears. However, there is no need to cringe at the cursed “m” word, or the even worse profanity —“debt.” There are ways to make it easier and lighten the burden of loans and payments.
Credit card companies seem to have a knack for singling out vulnerable college students. Although it can be tempting to sign up for multiple cards, try to limit it to one if you can. Each card you add lowers your credit score and can lead you to accumulate more debt.
If you are feeling like you need a credit card, look into student credit cards, as many don’t have an annual fee, offer lower interest rates, and low credit limit.
If you do have a credit card, don’t charge beyond what you can pay. You’ll be surprised by how quickly a Starbucks cappuccino here and lunch there can add up. Limit eating out and random spending because you don’t want small payments to stack up.
Buy that laptop used on KSL with cash rather than new with a card. Make sure you pay off charges on your card every month. Ric Eldman, co-founder of Edelman Financial Services, advises paying off a credit card in full monthly to prevent interest stacking up.
“Many of the people in severe credit card debt find that their balances are due to the interest charges rather than the actual cost of purchases,” Eldman said.
However, if that is hard, set up one recurring payment to build credit. Once that card is paid off, cut the card up or freeze it in an ice tray so it is difficult to use daily, but is available for emergencies.
Financial expert Jean Chatzky suggests paying with cash rather than card. When we pay in cash, we are more aware of what we’re spending and will be less likely to be shocked at our account statement. “If you’re trying to save, you should take the plastic out of your wallet, put $50s in, and call it a day,” Chatzky said.
Loans are another source of grief for students. That’s not to say they’re all bad – they are a good financial aid option for covering school costs. But, be smart and do your research before taking out a loan to avoid more pain in the end. Interest usually starts accumulating the minute you get your loan. Paying more during school can mean you pay less in the end. Making payments for the interest on your loan as soon as you can, even if your loan has a deferment period, will make the amount less when it’s time for you to begin making payments.
Plan for expenses and emergencies in a budget to track your money, or you can easily end up wondering where it all went. One option is the “envelope system” where you can keep labeled envelopes filled with the amount you can spend on various necessities so you don’t go overboard. Many people cringe at the word budget like it’s a bad thing — but it’s not! Financial expert Dave Ramsey suggests that we need to view a budget as a positive thing. He suggests seeing a budget as a way of planning to spend your money intentionally, which in the end actually gives you more freedom to spend
For on-the-go financial planning, use apps like Mint, which allows users to upload all their bank account and expense information and organizes your money into categories to avoid forgetting a payment. Another app called Level gives you a real-time image of spending, and Saved Plus automatically transfers your change for growth in a savings account.
Try little things to limit spending — even something like getting rid of cable and just using Netflix or Hulu. Play up your UVU ID card by asking retailers for student discounts. You will lower financial stress today and, after graduation, you will look back more fondly on these college years.