Money management is one of the most important skills you can learn, but few people receive formal education in this area. The result is that many adults struggle with huge debt balances, low credit scores and other challenges for many years.
As a young adult in college, your financial actions now may have a significant impact on your life for times to come. While this could be a positive impact, it can also be detrimental if done wrong.
You are fixated on making ends meet on a tight student’s budget and trying to earn great grades in your classes, but you also need to improve your knowledge of financial management, budgeting, and other related concepts.
Proper education about money handling and directed efforts in this area can help you throughout the rest of your life.
1. Avoid Student Loans
Student loans are one of the more common ways for college students to pay for their education. But, college graduates often leave school and enter the workforce carrying tens of thousands of dollars of debt. You cannot dissolve this debt through bankruptcy, and it can take graduates a decade or longer to pay off the balance.
Regardless of your current economic situation, you may adjust your money management practices and get out of college with no student loans. For example, by working full-time and taking a few courses at a time, you may pay your way through college.
You will need to learn how to budget to graduate without debt, and you will need to live below your means. This effort now may help you enjoy greater financial security later.
2. Build a Solid Credit Rating
Many young college students believe credit scores are only important when applying for a new loan or a credit card, but this is not the case. People may review your credit scores when you apply for a new insurance policy, set up new utility services, when you apply for a new job and more. This is a measure for others to figure how responsible you are with your finances.
You can demonstrate a good credit rating in college by practicing smart money management techniques. Avoiding credit cards is a good idea, and you can build credit with a secured loan, such as a car loan.
Keep in mind the digital tools, such as budgeting apps, that can help you live on a tight budget. Some apps also give you easy access to your credit scores, so you always stay on top of the situation.
3. Learn How to Budget
At first glance, living on a budget sounds easy enough. Yet, this basic concept of dividing your income to pay for your expenses is something many adults struggle with. The time to learn how to budget is while you are still in college and before you find yourself in a more dire financial situation.
Some people use an Excel spreadsheet to budget. Others take advantage of digital tools, such as financial management apps. The best budgeting platform is one that works for you. Try out several options until you find one that is well-suited for your needs. Remember to include a regular allocation of money to your savings account.
4. Respect the True Value of Money
In your younger years when you lived at home with your parents, you may not have had a true understanding of the value of money. You may have known how much things cost, but you may not have understood what it took for your parents to earn that money and to pay for all of your wants and needs.
When you venture out into the world on your own as a young college student, you learn that money does not go as far as you may like it to.
Focus your attention on how many hours it may take you to pay for a fun night out with friends or that fancy new pair of shoes you have your eye on. When you consider how long and hard you have to work to pay for the things you want and need, you may reassess how you spend and save your money.
5. Take Control of Your Finances
When you gain a better understanding of the way money and financial management work, you realize that money can control your life if you do not control it yourself. For example, when you spend and fail to save, you will find yourself buried in debt. In this situation, your debts control your life. When you spend and save mindfully, you can control your relationship with debt and even have money to invest.
Regardless of your current relationship with the money control, there are steps you can take to improve the situation. For example, you can track your expenses, so you understand where your money is going. Use this knowledge to find smart ways to adjust your spending habits. This simple step is essential throughout all stages of your life going forward.
You can see that your financial management skills and efforts now will impact the rest of your life in different ways. When you take steps now to improve in this important area, you can avoid the drawbacks that trip up many younger adults. These are pitfalls that can affect you for years to come, such as by collecting huge student loans.
Most college students do not have access to formal money management education. It may be up to you to educate yourself by reading articles and books.
Now is a great time to start learning more about money management and taking greater control over this important area
of your life.