Heading off to college? It's a great place to learn some basic financial skills along with literature, science, and math. This transitional time gives you the freedom to make purchases on your own while enjoying some provided necessities and, if you're lucky, a safety net.
But realize that, if you get off on the wrong foot, you'll ruin the very credit score that you'll need after college graduation to launch you into the world of job-hunting, renting, and home buying (as described in Nolo's article, Credit Scoring.) So take this time to learn how to live within your means -- it'll keep you out of financial trouble and build sound skills that will help you for the rest of your life.
1. List your anticipated college expenses.
Here is a partial list of expenses you can expect during college:
- Meals. If you're living in the dorms, your board may be included. But you'll probably still want to eat some meals out or, at least, order in some late-night pizza. If you'll be living in an apartment, or you won't be on a meal plan, add up how much 30 days of meals and snacks might cost.
- Books and supplies. You'll have to buy books for your classes, and textbooks tend to cost more than regular books. Save money by buying used copies, often offered at school bookstores, or by searching for the same books online. (Be sure to get the edition listed in the class syllabus, and check delivery dates.) You'll also need pens, pencils, notebooks, folders, printer paper, folders, and a good book bag.
- Computer. If you don't already have a computer or if you need to upgrade, you might be able to get a discounted student rate if you buy one through your school. You can also get a good computer at a low rate by buying it used, locally, or online.
- Printer. It's not hard to find low-cost printers, but remember to include costs for ink cartridges. And make sure that your printer lets you choose "black and white only" as an option or you'll spend a lot on color cartridges.
- Clothes and bedding. Remember to factor in additional costs if you will move to a region with a climate very different from the one where you currently live. As for linens, your current bedding may not fit your dorm-room bed, which may be an extra-long single.
- Furniture. If you're not living in a dorm, you may need to buy some simple furniture -- a futon couch, for example, or a desk and chair.
- Entertainment. Include costs for your extracurricular activities -- eating in restaurants, seeing movies and plays, or going to the occasional concert.
- Travel. How often will you return home, and who will cover those costs? Will you want to visit friends or sweethearts at other schools?
- Phone. Your cell phone minutes may increase, since you'll be away from family and your friends. Consider changing your plan to accommodate your changing needs -- and remember to incorporate this change in your budget. If you don't have a cell phone, consider a prepaid long-distance calling card.
- Other. Some other expenses: laundry, haircuts, athletic gear, medicines, toiletries, and batteries.
2. Sit down with your parents and discuss money.
Ask your parents to be very clear about what they'll pay for and what they won't. Discuss what to do in a financial emergency -- some parents give their kids a credit card to be used in emergencies only.
3. Make a budget.
Decide how much money you'll need. Some of the costs (computer, printer, furniture) are one-time outlays; separate these from ongoing costs. Allocate a certain amount of money for each category every month.
4. List your income.
What are your sources of income? Will you receive any financial aid, scholarship money, or loans? How much money will your parents give you, and what will you have to earn on your own? This will help you determine whether you need a part-time job and how much money you need to make at that job.
5. Open a local checking account.
If you already have a checking account, make sure your bank has a branch in your college town, and give them your new address. If not, open a new account near your college, and get checks and a debit/ATM card.
6. Consider a credit card -- or not.
You may want to avoid getting a credit card, because it's easy to rack up debt. If you do get a credit card, get one with a low spending limit, use it only for items you know you can afford, and be very careful to pay the bills on time, and, better yet, in full. Late payments can wreak havoc on your credit score.
With just these few simple precautions, you can get your finances in good working order -- which will relieve stress and give you more time to concentrate on the truly important stuff, like learning and having fun. For more information on budgeting, see Nolo's article Budgeting: How to Make Budget.
If you do get into financial trouble, or just want to educate yourself so you don't run into problems, get Solve Your Money Troubles: Debt, Credit & Bankruptcy, by Robin Leonard and Margaret Reiter (Nolo).