Financial Tips for College Students

This month, The Money Writers is having its second group writing project. The topic this time is about financial tips for college students, most of them just began their new school year after the long summer break. This is a relatively new area for me, not the financial tips part, but the college part because I didn’t exactly have a college life here in the states. My undergrad years were spent in a college in the northwest China. As you can imagine how much different that experience can be from the college life here nowadays. Back then I didn’t have to pay tuition because it was covered by the government and my parents provided everything else. So basically, the last thing I needed to worry about was money and, therefore, I didn’t develop much financial common sense through my college life, except knowing that money didn’t come easily (maybe that was just enough :) ).

Though I didn’t went to a college here, I did, however, spent four years in the States to get my graduate degree and experienced a college life, a slightly different one. I still remember the day when I opened my bank account and had my first check book. When I got my first ever credit card, I was really excited. Since then, credit cards have changed the way I approach money and become an indispensable part of my financial life. If there are any financial tips I can offer to college students, the first two come into my mind are:

Earn some money and save some

During the time when I taught at a university, I noticed that lots of my students, while taking five or six courses a semester, worked after classes. Whether you pay your education yourself through a college loan, or, like me, have your parents paid it for you, chances are you may need to work a little bit, on or off campus, to earn some spare cash. It’s always good to have money in your wallet for things you want to do and stuff you want to have. Just don’t spend all the money you earned. So what can you do with your loose changes after you paid all your bills? One of the options is opening an IRA account. You don’t have to make a lot of money to have your own retirement account. As long as you have earned income, you are eligible for an IRA account. An IRA account not only can lower your tax (most likely you will be eligible for making deductible contribution), but also can help you develop the kind of financial discipline you will need after finishing the school.

Get a credit card and use it wisely

You know how important credit worthiness is these days. Without a good credit history, you later will find out it’s going to be difficult to rent an apartment, get a car loan, or sometimes even get the job you want (yes, there are employers check credit history). From my experience, one of the best ways to establish credit history is getting a credit card and use it wisely. Getting a card isn’t really difficult. There are tons of cards designed specially for college students from major issuers such as Citibank, Chase, and American Express. What’s difficult is being responsible with the card. What I mean being responsible is charge your card with care and pay your bill in full every month. Using credit cards can always give people a false sense of ease because there seems to be no money involved, but at the end of the day, you will have to pay the credit card bills. Credit card can be your friend. It can also ruin you if you are not careful with it. The bottom line is, don’t spend more than you earn.

Anything else? Of course, you can always live a frugal college life, as suggested by Jason at Frugal Dad. Meanwhile, check out what other Money Writers are saying:

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4 Responses to “Financial Tips for College Students”

  1. AndyS |  Aug 27, 2008 at 6:37 pm

    Some very valid points here. I did a recent post on this topic as well and I would say you need to be cautious with part time work. Extra money is great while at college, and necessary in some cases, but don’t forget why you are here – to learn! When I was in college (or university as I called it) I knew a class mate who had 3 part time jobs (2 night jobs and one daytime retail role). This was great for his cash flow and he was always the biggest spender of the group. It also made him popular with others who would count on him for a round of drinks whenever he was at the bar. However, he sacrificed valuable study time for working (and maintaining an active social life) which meant he fell behind in his studies, including missed classes. He finally got back on track when he had to repeat and pay again for the entire semester, but still graduated a year after the rest of us. In financial terms, the opportunity cost of graduating a year later is equivalent to one year of salary from a full time job and the additional tuition costs – far more than most part time jobs are worth. Also you will be one year behind your peers in experience and top employers prefer not to hire students with poor grades. Money from part time work is great in the short term, but don’t over do working while at college because you could be sacrificing much more in the bigger scheme of things.

  2. Hank |  May 14, 2010 at 3:02 pm

    Finding the time to really stay on top of your finances and tracking your spending can go a long way towards not being broke each month. Nice article. Thanks.