College can be a daunting time. The constant stress of academia, maintaining relationships with friends and family, the pressure of getting involved in clubs or activities and possibly balancing all of this with a job or collegiate sport.
Despite all these challenges, attending college is both valuable and rewarding; as it is an investment in yourself. College students’ biggest struggle is maintaining their finances during a chaotic time. As a senior finishing my tenure in college, I have learned how to keep my personal finances in order. I have achieved this by trial and error in the last few years. I did not get it right 100% of the time, but I learned throughout my journey.
Go in With a Plan
Everyone reading this knows that college is expensive and going into it with a plan is especially important. When a freshman or sophomore high school student decides to attend college their first thought should not be “What should I study?” but rather “How will I pay for it?”. This may require a student to save by working long hours at a high school job. Students can also apply for Federal Student Aid (FASFA) or other loans and develop a plan to pay it early and often. Others may explore opportunities with the military to receive discounted, or in many cases, free college. The Ohio 529 (or other states’ equivalent) is a wonderful way to set aside money for higher education. This is an investment plan that grows tax-free at the federal and state level and offers an Ohio state income tax deduction. Taxpayers can deduct up to $4,000 per beneficiary, per year. Any contributions exceeding the $4,000 limit can also be carried forward and deducted on the next year’s return. Furthermore, this is a great account for others to contribute to, whether it is $25 from grandma every birthday or a $500 gift from a parent. Some practical advice is to work hard in high school to receive locally sponsored and university scholarships based on grades, test scores and extracurricular activities. Keep tuition price in mind while visiting colleges and exploring options. This may mean going to a public in-state or commuting to a local college.
Create Semesterly Budgets (and stick to them)
Utilizing spreadsheets for budgets can be a useful tool. This is a fantastic way to see your personal cash flow, and how/where your money is being spent. Recently, I moved to an off-campus apartment, and I have found this to be the best way of keeping rent, utilities, groceries, entertainment and savings in order. I use this budget to track my rent and utility payments to ensure I am staying up to date. There is no right way to do this, so find a way that works for you. Sometimes sticking to budgets may mean saying no to friends on various activities like golfing, restaurants and bars, shopping, concerts and trips. It will be hard, but your future self will be grateful.
Work an On-Campus Job
Most college students work/intern in the summer and take the fall and spring off to focus on their studies. If you find yourself in this group, I strongly encourage getting an on-campus job if your schedule allows. On-campus jobs allow students to work for 5-15 hours a week, working around class schedules. These flexible jobs provide a way to have an inflow of cash and help with the abounding expenses during the semester. These work opportunities require little to no skill and sometimes allow students to study while on the clock.
Look Out for Scholarships
Scholarships are a great opportunity for students to receive money for educational purposes. At most colleges, faculty will send out departmental emails with various scholarship possibilities. College faculty is the greatest resource for scholarships as they are always looking out for their students. Other ways for college students to look out for scholarships are with platforms like Handshake and LinkedIn. The process for scholarships varies, but it usually requires basic information on an application, and an essay or two (usually no longer than five hundred words).
Start Improving Credit Score
Starting and building a credit score in college can help you significantly when making a large purchase in the years following. If you have never used credit, it can be particularly challenging to start. Many credit card companies have student cards. These student cards allow you to build a credit score from scratch and offer some rewards. Utilizing autopay on your credit card is one of the best things to do with it. Autopay allows the card to pay its balance each month, as it is linked with a personal bank account. This ensures that you pay the statement balance on time, avoiding any late fees, interest, and penalties. Autopay is a great method to rapidly increase credit score. When doing this, one needs to be mindful not to overspend the card. Credit card companies will hate you if you pay your bill off fully, and on time. You will be getting cash-back rewards while increasing your credit score.
Invest Spare Change
If you find yourself in a position with a surplus of cash, it is a great idea to invest it. According to the time value of money principle, money in the present is worth more than in the future; due to its potential for earnings when invested. There are several brokerage firms where you can invest for free. I highly encourage investing in mutual funds with a Roth IRA. A Roth IRA is an individual retirement account that offers tax-free growth and withdrawals for retirement. You can withdraw at 59.5 years old, or in some cases, buying your first home. A person in 2023 can contribute up to $6,500 in a year. However, your Modified Adjusted Gross Income (MAGI) can disqualify you from contributing to a Roth IRA. For 2023, a MAGI of over $153,000 for single filers and $228,000 for married couples filing jointly can prohibit you from being able to contribute. There is no better time to put into a Roth IRA when one is in college, nowhere close to the disqualifications.
The road during college is not perfect, but I hope these tips can encourage prospective and current college students on how to take control of their personal finances!
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