5 Financial Tips for My Niece as She Starts College
Launching good financial habits while in college
Thanks for the photo by Erda Estremera on Unsplash
As my sister and brother-in-law drop off their eldest to her first year of college, I am sending love and positive thoughts to my niece. Since so much of my professional focus is helping students and their families with college costs, I thought I’d dedicate this article to her and all college students starting their college journey as well as their personal financial lives. Here are my five financial tips for the start of odyssey.
Get a job.
Working part-time and going to college is doable. Building job skills like teamwork, problem-solving, and communication are a great way to augment your education. Consider jobs that you can work between 5-15 hours a week during the academic year. You can still focus on studies but get pocket money for paying for college costs like books, coffees with friends, and saving for a small emergency or that spring break trip to the beach. Some of these jobs can be fun and expand your social network such as being a barista at the college’s coffeeshop. Other jobs help build resumes and give you insights into potential careers like interning at a law firm or conducting research at microbiology lab.
Create a budget.
I know this "B" word can be scary and may not feel necessary when you are dealing with small dollars. The reality is that having some money management skills help you build confidence and create positive financial habits. Think about how much you need for "musts" like paying for college costs like tuition or transportation costs to the high school where you volunteer as a mentor and "wants" like smoothie and latest Marvel movie with a friend. Whether you make budget on Google Sheets from scratch, right a quick list on a paper napkin, or use an app like YBAB (which is free for college students), take a bit of time to think about your expenses, spending habits, any college costs that you plan on covering yourself, potential emergencies you need to cover, and savings.
Exploit student discounts.
Get ready to show your college ID, so you can benefit from the savings. Tons of restaurants, clothing stores, technology providers, local venues, and online services offer 10-60% discounts for students to *hopefully* turn you into a loyal, returning customers. These groups understand that you may be cash strapped, but also need to live. Use them to meet your needs and occasional wants. If you need to travel across the city to your externship at the hospital, consider the 30% reduced bus pass for students. Check out the 50% discounts on bike and scooter shares around campus to get to class or head to the gym. If you are a design student needing Adobe Illustrator or video production assistant needing Premiere Pro as a part of your college costs, you can pay 60% less for Adobe’s Creative Cloud. J Crew offers a 15% discount online to keep you in style and outfitted for your internship interview at a discount. Heck, you can get a free drink when they buy a meal at Chick-fil-A or Chipotle.
Establish credit in your own name.
There are two primary methods for creating a credit history as a college student - taking out a student loan to pay for college costs and having a credit card. For many, the Federal Student Direct Loan is the first form of credit in your own name. The federal government requires that you complete a Free Application for Federal Student Aid (FAFSA) but does not check for a credit history. No payment of interest or principal is required while you are in-school or in your grace period, so being a student loan borrower has a neutral effect on your credit score. However, it does help you build a credit history over time and will help you grow diversity of your credit types.
Another practical way to establish credit is becoming a credit card user. Based on the CARD Act, only 21 year-olds can get a credit card in their own name. If you are less than 21 years old, you can become an authorized user on someone else’s credit card (like your parents) or show proof of steady income to apply for a credit card on your own. By paying off your credit card balance on time and in full and avoiding open multiple credit card accounts in a short period of time, you can build a positive credit history and credit score.
As a student, you are offered a ton of free stuff. Free food will be served at the “Challenging Gender Roles in History” lecture sponsored by the History department. Free transportation may be provided across campus on buses. Free music is performed by fellow students in the Music department every Thursday. Free yoga and meditation classes are available at the student health center on Monday mornings. Free members is offered to professional associations like the National Society of Professional Engineers and American Institute of Certified Public Accountants. Before you plan to spend money on food, transportation, or entertainment, consider the free options.
Colleen MacDonald Krumwiede is a financial aid and paying for college expert with over a decade of financial aid experience at Stanford GSB, Caltech, and Pomona College and another decade at educational finance and technology companies servicing higher education. She guides go-to-market strategy and product development at Quatromoney to transform the way families afford college.