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By Scott E. Halliwell, CFP®, ChFC®, CLU®
Though it seems like forever ago that I was a wide-eyed 18-year-old headed off for college (maybe because it was?), I can still vividly remember my sense of excitement. The mountain was mine to climb!
And while I wouldn’t trade my college experience for anything, there are a few things I wish I’d done differently … well, lots of things, actually. At the top of the list? I wish I’d made better financial decisions (let’s just say financial wisdom wasn’t always my strong suit). Like many students, I made some really dumb decisions that almost put me under the mountain instead of on top of it.
So with that water long since under the bridge, here are four tips I wish somebody had shared with me when I was a college student.
1. Never carry a balance on a credit card.
This one is simple for most college students: Never charge more on a credit card than you can pay off that month. While getting and using a credit card can help you start building your credit history, using it poorly can create a type of history you don’t want. Bottom line here, if you don’t have the money in the bank to pay for it, don’t charge it. Seriously.
2. Keep money in the bank.
Whether it comes from summer work, a job while in school, graduation gifts or the ongoing love of your dear Aunt Sallie, money in the bank is your friend. In other words, be kind to it and keep it around. Whether you’re in college, the military, or civilian life, having money in the bank is one of the best things you can do to help you avoid going into debt.
3. Limit student loans.
Paying for college can be tough, and student loans are one way to make it work for a lot of students. Unfortunately, many of these students will be presented with the opportunity to borrow more money than they actually need to go to college, and even though they don’t need it, they’ll take it anyway simply because they can. So this brings me to a very important point about student loans that should never be forgotten — they’re loans! Meaning at some point, you’ll have to pay them back. It may sound fairly obvious, but the less you borrow now, the less you’ll have to pay back later. So whatever you do, don’t take students loans just because you can. Only take what you need.
4. Work if you can.
A lot of college students will find summer jobs to earn a few bucks, and I think this is great. However, I also think it is valuable to work during school if possible. Yes, it creates the extra stress of having to balance school and work, but that stress and experience can be very valuable on a number of fronts: 1) It looks good on your resume when you start looking for jobs after graduation; 2) It helps you develop some “real world” balancing skills that you can use for a lifetime; 3) It gives you extra money to help with my points of keeping cash in the bank and avoiding debt; and 4) Who knows, you might even stumble into a career area that has appeal!
Though coming out of college with a solid educational foundation is the main goal of college, coming out with a solid financial foundation is pretty darn important as well. If you know someone with the prestigious title of college freshman, sophomore, junior, senior or grad student, please share this information with them so that they might come out with both.
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