College Personal Finance 101

Are you an average college student?  I hope not, because many students are making some financial mistakes that can hurt them for years. I was curious to see what the statistics are for U.S. college students. It doesn’t look great:

Average College Student graduates with:

• Over $3000 in credit card debt
• Over $19000 in student loans

Don’t be average! That’s $22000 in debt before graduation. While you can get federal student loans at lower rates, you’re still stuck with the monthly payments for around 10years!

How can you minimize these two burdens? It takes a plan, time, and self-discipline.

Have a Financial Plan That Works For You

Here are some ideas from the around the web:

Start a Budget!

Find a system that works for you.

• Zero based budget
• Envelopes
• Guideline Budget
• Trial and Error
• Software (Quicken, Money, Mint, etc)
• List of budgeting tools

Build an Emergency Fund:

This fund is to protect you against Murphy’s Law and dipping into/deeper into debt. Be ready for when bad things happen.

• If you’re a fulltime college student, consider getting a $500 emergency fund as a cushion.
• If you have a family, try to save $1000 for your emergency fund.
• Once you eliminated your debt, come back and build a cushion of 3-6 months of expenses.

Eliminate High Interest Debt:

You want to get rid of your credit card debt as soon as possible.

• Prioritize your debts: Find a way that works for you and eliminate your debts.
• Call the debt collectors and negotiate a payment plan.
• Take a part-time job and dedicate that money toward paying off debt. Perhaps using your summer semester time and working full-time.
• Create a debt elimination plan. Motivation is the key here, so use something that will keep on you on this program until your debt is eliminated.

Find Untapped Scholarships:

• Use Fast Web: I used this to find may unnoticed scholarships. It takes 20-30 minutes to set up. You’ll receive emails on some scholarships that fit your profile and interests.
• Check out Ramit’s Guide: Here’s a guide that can help you find many scholarships that go unnoticed.
• Free Money Finance has some scholarship and financial aid advice as well.
• Find some money by looking ways to minimize your (or your parents’) taxes.

Give/ Volunteer to a Worthy Cause

• If you can, donate (money, gently used items, time, etc) to something special to your heart.

I organized some tips together in an ever growing series called Rich College Student (It’s not the most creative name). It’s a list of topics that can help you graduate in style.

Rich College Student Series

In case you missed them, here’s the entire Risch College Student series:

• Getting the Most Financial Aid
• Keeping a Budget
• Saving on Your Grocery Bill
• 10 Tips to Save You Hundreds of Dollars
• Emergency Fund 101

Photo Credit: Eldar

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