Practical Advice for Those Heading to College
Financial literacy is an essential part of planning and paying for postsecondary education. Making sound financial decisions requires:
- Understanding the wide range of financial products, services and providers available.
- Creating a financial plan to help reach your goal.
A financial plan serves as a roadmap for how to manage your money on an ongoing basis. At its most basic, a financial plan:
- Defines your money goals.
- Identifies the steps to reach those goals.
- Guides you through the steps.
For guidance, the National Endowment for Financial Education has created a guide called “40 Money Management Tips Every College Student Should Know.” The guide includes tips to create a financial plan, as well as smart ideas for saving, spending and protecting your money.
Practice Good Credit Habits.
Even if you don't need loans to pay for college, you eventually will need to borrow money.A higher credit score can save you thousands of dollars over your lifetime through lower interest rates and easier access to funds.
Here are a few ways to build and maintain a good credit score (700+) while avoiding financial headaches.
- Always pay your bills on time. To avoid late fees, note the due dates as soon as you receive statements. Keep a copy of all bills and loan payments you make.
- Don't bounce checks. Writing a check for more money than you have available in your account leads to fees from both the bank and the merchant where you wrote the check. Bounced checks also can get you into legal trouble. Keep track of your account balance and leave a cushion so you never have to worry about bounced checks or overdrafts fees.
Use Credit Card Sense.
Credit card interest can put you in a financial hole. If you want to start building your credit history, choose one card with a competitive interest rate. Pay the balance in full each month.
Don’t Ignore Credit Problems.
If you find yourself in financial trouble, don’t ignore the problem. Whether you’re missing payments, bouncing checks or increasing your debt, you are negatively impacting your credit score. Ignoring the problem will only make it worse. Get help. Your local financial institution or college financial aid office may be a valuable resource to help you get back on track.
This content has been provided by Practical Money Skills and is intended to serve as a general guideline.