As young adults leave high school diploma in hand and college bound, they get their first taste of adult life. Rent, tuition, books, food, possibly even car payments are just a few new bills that may add up in a student’s life. The resulting need for money during a already-strenuous time may cause financial irresponsibility that could take years to absolve themselves from. That being the case, here are some financial guidelines to live by as a college student!
Use Credit Wisely
Your credit is essentially a guideline for lenders. The more responsible you appear to be with money coupled with how much money you make allows lenders to trust you with higher spending limits. Credit card companies know that students don’t have established credit and will often target students by offering higher limits than the students need. This way, credit card companies can maximize the amount of interest they can earn. Using credit is sometimes a necessity, and under normal circumstances, may be fiscally healthy. Obviously, you may not have thousands of dollars to purchase a car, but the structured monthly payments that allow y ou to drive a car meets your needs and allows you to build a good credit history. Until a young adult can understand credit and what it means to them, parents are urged to discourage spending too much on credit cards, or to intentionally impose a low limit. Small mistakes are much easier to overcome and affect your credit less.
Student Loans
An excellent source of funding for higher education, student loans can be your best friend… but are also your nagging worst enemy when you graduate. To keep your repayment costs to a minimum once you graduate, try not to overborrow for things like food and partying. This mistake can seem like a good idea now, but you will be accruing interest on every penny you borrow for years to come. Also, repaying your student loans on time once you graduate will help you build credit. Some lenders even give discounts and reductions for punctual payments or even accepting automatic payments. Finally, if you work in a public or non-profit institution such as teaching at a public school or working for a charitable organization, you may qualify to have some or even all of your student loans forgiven. Talk to your financial advisor at your college if you are unsure whether you have a chance for qualifying.
Feeling Hunted During Tax Season?
Taxes are a necessary part of life. Most (if not all) employers will deduct money from your paycheck so that you don’t end up owing Uncle Sam money every April. Students usually have finals going on around this time and put their taxes on the back burner… usually thinking “I don’t make enough for it to matter” or something similar. That kind of thinking can land a student into some trouble as fines can rack up and eat away at the tax refund you might have received had you been punctual with your return. Also, reporting accurate information on your taxes is very important. Tax evasion is considered a felony. If you are convicted, it will be a huge smudge on your permanent record.
Build a Nest Egg
Being one step ahead of the game plays a major role in a successful academic career. Not only are studying, reading, and doing homework ways to accomplish this, but saving money is one that most students overlook. If you have the opportunity as a student to save even a fraction of each paycheck, it will add up before you know it. The what-ifs are endless when it comes to how it will save you. What happens if your car breaks down. Do you have the luxury to be able to call your parents and ask for emergency funds? What happens if you drop your laptop and crack the screen only to regret not having purchased that protection plan? It’s always better to be safe than sorry.
So to review, build good credit, use credit cards wisely, be aware of the stipulations that come with student loans, observe the tax deadline more seriously, and put back some money if there’s any possibility. All of these tips may seem like common sense, but they’re just the tip of the iceberg. For more tips, visit your local Park Community branch and speak with one of our financial advisors. They’re there for you! Also, members have FREE access to financial counseling right over the phone with Accel.
