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.
Student Loans
With rising tuition costs making a college degree as expensive as a small home, many families are turning to student loans to finance education. I’ve heard many families express that student loans are the “only option,” and when I was heading off to school I felt the same way. However, hindsight has helped to change my views on student loans, and recognize that there are other options.
First of all, loans may not be required if you opt to attend an in-state, public institution. It may not be the college you dreamed of attending as a kid, but chances are it is more than adequate in terms of the educational opportunities offered. I chose to go out of state myself, and that single decision added thousands to my tuition that could have been avoided by staying closer to home.
Room and Board
College dorms are not exactly known for four-star lodging, but are often much cheaper than off-campus housing and typically include a meal plan. Speaking of meal plans, if you are the type who just refuses to eat anything cooked in a cafeteria you may do better to skip the meal plan and load up on Ramen noodles. Just remember, there is a trade off for eating on the cheap–your health.
Unless you want to experience the “Freshman Fifteen,” or worse, I’d recommend sticking to the meal plan and eating a variety of fruits and vegetables with each meal, as a rule. Easier said than done with no less than seventeen pizza places within five miles of campus! And believe me, I made my share of late-night runs to Taco Bell!
Later in your matriculation you may find that joining up with roommates to split the costs of an off-campus apartment is cheaper than staying alone. If you go this route, be sure to fully investigate individual college housing contracts so you aren’t on the hook for a roommate who has a change of heart and goes home half way through the semester.
A Word About Credit Cards
Next to football fans, the loudest group you will find on your campus may be those soliciting credit card applications. If I should ever be in charge of a school one day (not likely) one of the first things I would do is end the agreement than allows credit card companies to sign up students on my campus in exchange for a free t-shirt. I don’t think credit cards are evil, but I do think they should be avoided in college.
Don’t fall for the “you need to build your credit” sales pitch–there will be plenty of time for that later when you have a solid job and can afford to repay your debts. Because I was strapped for cash while away at school I accepted a credit card to fund “life expenses” such as groceries, gas, and occasionally the utility bill! I left school with a free t-shirt and a pile of debt as souvenirs.
Entertainment
One of the perks of being around a college campus is that there are no shortages of opportunities for free or low-cost entertainment. Check out bulletin boards and websites at student unions or near the campus bookstore to stay up on the entertainment offerings around campus. Many times schools will offer free outdoor movies, or guest speakers.
When my wife (then girlfriend) and I were in college our first date was attending a motivational talk by the real life subject of the movie Rudy, Dan “Rudy” Ruettiger. As a football junkie, and a sucker for a motivational talk, this was right up my alley. I knew my wife was “the one” when she agreed to wait nearly two hours for a chance to meet “Rudy” and get my book autographed.
Keep your college ID on you when out and about your college town. Many stores and restaurants offer a nice discount to college students, especially around back to school shopping times when students are loading up on textbooks and other supplies.
Start a Savings Plan
One of my favorite lines from a great Chinese proverb reads, “The best time to plant a tree is twenty years ago.” As I sit here some thirteen years after my freshman year of college it is easy to play the “what if” game. What if I had started saving a little money all those years ago. I spent most of my college years broke, and working just to keep the lights in my apartment on and gas in my tank. At the time the last thing on my mind was trying to save money. After all, how much could I have really saved? Open a savings account (check out my review of the best online banks) and try to save 10% of any earnings, or $5 a week, or $25 a month. Don’t be overly concerned with the amount you are saving, just start saving something, consistently, to reinforce the idea that saving money is a good habit to develop at a young age.
Early Frugal Living
It is difficult when you are young to fully appreciate the benefits of living frugal. However, many special life events will likely occur in the decade after graduation. Most of you will get married, start a family and a new career, and maybe even buy your first home. Resist the temptation to saddle yourself with debt during your college years so you can enjoy these life experiences debt free.
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