Many college students need to live modestly in order to get by, and sometimes students mind find themselves short on cash. However, building good financial habits and handling your college expenses don’t have to be overwhelming.
With a few quick, measured moves, you have the authority to own your financial past and future. For college students, budgeting is an essential part of achieving financial stability.
Here are some tips to help college students get back on track financially. For those struggling with motivation or having trouble juggling education, life, and work, check out the tips in this article.
Avoid Debt in the First Place
Many college students take out more loans than they need. In reality, a recent CNN Money article reported that $35,200 was the average student loan debt in 2013, and 50% of those students said it would take nine years for those loans to be paid back.
The fact is that student loans can be complicated to get rid of. Student loans are not always avoidable, but you should do everything in your power to take out minimal loans. Make sure you measure the ROI on the student loan debt if you decide to use loans.
Definitely Avoid Private Student Loans
How much you can loan each year is limited by the federal student loan program. Depending on your grade level and dependency status, you can borrow up to $5,500 from the federal direct subsidized loan program as an undergraduate.
In addition, you can borrow up to $20,500 from the unsubsidized direct loan program, minus any subsidized amounts you earn for the same duration. However, you will need to pay some interest on unsubsidized student loans.
Private loans, on the other hand, always come with relatively high interest rates and should therefore be avoided as much as possible. Always prioritize taking out government loans before even considering a private lender.
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Opt for Secondhand School Items
A single new textbook can cost hundreds of dollars, but these items can also be purchased secondhand from retailers such as Amazon, AbeBooks, or the bookstore on campus.
Pay careful attention to the edition and publication date when buying used textbooks, especially in subjects such as science, social sciences, or mathematics, as an older edition may contain entirely different details from the one listed by your professor.
Do the Basics
Spending less money than you receive is one of the most important principles of sound financial health. You can prepare for your future and make investments without the burden of taking on debt if you have a surplus of cash every month.
Look at what the average millionaire does if you want to be a millionaire yourself—they spend less than they make! A budget is a powerful tool. You can gain insight into where your money is going and where you need to cut back when you build an account and monitor your expenses.
However, this doesn’t mean you will never have any fun living on a budget. It just means the fun you have won’t stop you from paying the bills.
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Plan for Your Emergency Fund and Insurance
For optimal financial health, emergency funds are necessary. Start a small emergency fund with around $1,000 if you’re focused on paying down debt. When you pay off debt and begin making more money, you can then add more money to your emergency fund.
On another note, for virtually anything under the sun, there is insurance available. As a college student, knowing what kind of insurance you need is critical. If you don’t have kids and are not married, then you don’t need life insurance at all.
However, you will still need health insurance, car insurance, and insurance for renters or homeowners. Having such coverage will save you enormous amounts of money while life doesn’t go as planned.
Have Smart Goals
Even as a college student, you may already have a lot of different financial targets in your mind. Shortly, you’ll be faced with big purchases if you haven’t already been. You’ll determine whether or not to purchase, a house or a car, among other items.
Think about your future now and build expectations that you will work towards. If you think you will buy a house, build a down payment fund. If you’re going to buy a car, start saving for it. For those large purchases, aim to conserve as much cash as you can.
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If you learn to handle your cash the smart way while you are young, you have a bright future ahead of you. To set up a stable financial base for the future, you should start making wise decisions about your money now. Start being financially motivated by following these tips!