Going to college means gaining newfound freedom for many students. While it is a time to pursue your passions, make friends, and grow, the choices you make with your money can have lasting effects on your financial future — for better or worse. The following tips will help you to make sound financial decisions as you enter the next stage of your life and prepare you to have great money habits in the future.
1. Maintain A Budget
Gaining financial independence is an exciting time for freshman college students. However, you must manage your finances responsibly to avoid overspending and falling into tricky situations. Little purchases can add up quickly, so incoming freshmen should begin to think about budgeting as soon as possible. Creating a budget allows you to track your earnings and significant expenses like food, gas, and bills. After monitoring what you must spend on necessary expenses, you will know how much your income can be spent elsewhere. You can begin writing a budget anytime. Doing so helps those starting out to gain financial literacy early on and avoid making monetary mistakes.
2. Start Saving
During college, you may face an emergency or an expensive opportunity with unexpected costs. Opening up a savings account is one way to safeguard against surprise situations. Whether you’re creating an emergency fund, or building up a financial foundation after you graduate, beginning to save your money is a great financial habit. If you are working while earning your degree, setting up a savings account can help you prepare to repay student loans, move after graduation, or pursue graduate school. Even contributing small amounts to a savings account can be a monumental help in the future. Furthermore, getting into the habit of setting aside money to save strengthens your financial literacy as you enter adulthood.
3. Monitor Scholarship Opportunities
College tuition can be expensive. Payments made each semester can make it harder to save money. To help combat this, first-year college students should take advantage of scholarships that help pay for school to lessen their financial burden. New scholarships are open to students every semester, regardless of class standing. Researching scholarships now to help pay for books, living expenses, and other costs will give you more disposable income as a freshman. Unlike student loans, you don’t have to worry about paying back the money given to you on a scholarship. Taking advantage of scholarships is a great way to graduate with less debt and more savings.
4. Apply For a Part-Time Job
Enrolling as a full-time student will take up much of your time. However, if you need a more reliable or steady income, consider looking into part-time jobs in your area or on campus. In 2020, 74% of undergraduate students worked part-time while still in school. Both on and off-campus jobs can give you the extra income to start savings or to expand your budget as you move into college. On-campus jobs also allow you to spend less on transportation costs and are usually flexible with your class schedules. Most colleges have work-study programs that students can use if they qualify. Learning to juggle working and studying will help you later in life with time management. If working part-time isn’t the right fit for you, consider turning one of your hobbies into a “side hustle” instead to earn extra money.
5. Start Building Credit
Once you graduate, having good and stable credit will be essential in making milestone purchases like buying a car or a home. The earlier you start building your credit, the better off you will be. One of the pitfalls college students often make is leaving college with credit card debt. Research shows that 64.8% of college students graduate with some level of credit card debt. Often this debt is racked up through online shopping, dining out, and other non-essentials that can drive up your balance. A credit card can be a great first start in building your credit; however, you should be careful with how much you spend. Maintaining a low balance that you pay off on time will help you establish good credit without garnering extra debt.
6. Begin Investing
Although investing as a college freshman may sound daunting, starting now could benefit you in the long run. Investing may be an option for some, but if you are able to invest, you can boost your financial literacy early on. Learning how to invest your money as a college student can give you valuable skills as you earn more money once you graduate. While there is a level of risk to any investment, starting small will soon develop your understanding of how to invest. Small investments can still grow significantly.
7. Understand Your Student Loans
Repaying your student loans may seem like a far-off task as a freshman. However, to ensure you handle your debt wisely, you must keep track of your student loans throughout your college career. According to Education Data, 74.8% of undergraduate students take on student loans. According to a July 2023 survey by U.S news, 85% of borrowers believed that they would face financial difficulties trying to repay their student loans. While student loans can be challenging to pay off, preparing your finances for future repayment can help alleviate stress. College freshmen can talk to financial aid offices, research potential repayment plans, and stay up-to-date on when their loans will be due to maintain their loans responsibly and avoid mistakes.
Refinance Student Loans with ELFI
One way to prepare for your future is by understanding repayment options on your student loans. If your estimated monthly payment appears to be high, refinancing your student loans could be a potential option for you in the future. ELFI can help lower payments, reduce interest rates, and shorten repayment terms.* See how much you could save with ELFI student loan refinancing.
