College students learn many useful facts and skills in the classroom, but one thing that really isn’t taught is money management. Perhaps the most crucial of life skills, this area often gets short shrift in academia. If this area wasn’t taught at home, the student is left floundering on his or her own to try to make smart choices. Credit companies often take advantage of this naiveté, and offer seemingly-easy credit that often ends up having some pretty harsh payment terms.
What’s a poor student to do when faced with the choice of having some outrageous fun, or saving money? The parental answer is to control those urges and spend money wisely, but that is often easier said than done on a college campus. Here are a few tips that can help college students make better financial choices without having to cloister themselves in their dorm rooms:
• Keep up academically: Many students don’t realize that their financial aid is predicated on demonstrating certain levels of academic achievement. The student must satisfactorily complete a certain number of academic hours each semester in order to maintain eligibility. Dropping out or failing classes can have disastrous consequences on financial aid. Without that foundation, the student might not be able to continue college the next semester.
• Budget realistically: It’s important to have a budget in the first place, but don’t be too harsh in your allocations. Allow yourself a little “fun money” each month so you can take advantage of the full college experience without going overboard. This will force you to really think about where your money is best spent when faced with possible entertainment options.
• Don’t abuse student loans: Many students rely on student loans to support their lifestyle, when their intended use is simply to help pay educational expenses. Because interest payments on federal student loans and most private student loans are usually deferred until after graduation, they don’t really see their debt burden growing. After graduation they find out how much has been borrowed, and are shocked to see what their monthly payments will be. Pay as much as you can as you go, work as much as possible to earn out-of-pocket spending money, and limit the use of student loans to educational expenses.
• Know your scholarships: Before you even start college, you should know whether scholarships will run the entire four years. If not, you might have to make some tough decisions. In any case, you also need to keep looking for scholarships during the college years to find some that might be able to provide an additional amount of money to cover your increasing expenses.
If your college isn’t going to provide the real life lessons you need, take it upon yourself to get smart about money management. Decisions you make and actions you take now can have negative consequences down the road for you and your parents, so get smart while you’re getting educated.