As a young and black college student, I will say that I am not the best when it comes to managing finances. I personally believe that college itself is a trap for young adults who are not stable, whether it is financially, mentally, emotionally or physically.
I hardly made mistakes with money until I began attending college. I am now constantly buying food, electronics, paying for gas and bills versus purchasing books, school supplies and other educational needs.
For many young people like myself, college is the first money management experience we experience and many of us are not adequately prepared to handle our own finances. One of the leading reasons that students drop out of college is because of finances – often due to poor personal money management.
Parents recognize the need for their kids to have basic personal finance knowledge, but many of them are unable to teach their children good money management skills. Parents should know that learning good personal finance habits does not have to be difficult or complicated.
By practicing basic money management techniques, college students can feel confident about their ability to manage their finances. The first thing every college student should do to gain control over their financial lives is create a spending plan. Having a spending plan will allow students to see where their money is going and where they can cut back their spending.
Students often have no plan for how to use their money. In this case, they would benefit from setting financial goals. There are things each of us want to get out of life, and we have to plan for how we will pay for them. Students need to write down these goals, as opposed to just thinking about what they want to do with their money in the future. Writing goals down has been proven to lead to greater success in actually achieving goals.
Writing down a goal makes it more permanent and you are more apt to remember and reach it. It may sound pretty basic, but determining “wants” versus “needs” can help tackle financial stress. Many college students try to live outside of their means because they have not thought about categorizing their expenses – determining what they really need versus what they want.
You probably understand food is a need and coffee is a want, but some mornings, a Starbucks latte is sure to feel like a need. However, there are almost always inexpensive alternatives for your “wants.” In this situation, skip the trip to the coffee store and brew your own coffee at home for a lot less.
Determining wants versus needs will help college students avoid impulse purchases and overspending.
Credit cards also help with finances, but many college students mismanage them and find themselves caught in a cycle of debt. To prevent making mistakes with credit cards, students who are considering using credit cards should first determine if credit really is a good option for them.
The students that can handle credit wisely understand that they need to set limits for themselves on what they use credit cards for. They have the self-discipline to not use credit to purchase what they cannot afford, and know they will be able to pay the credit balance in full each month to avoid wasting money on interest.
Also, people under 21 cannot get a credit card unless they have a co-signer or are able to prove that they will be able to pay their bills with only their present income. Before parents co-sign for a credit card, they should make sure that their student understands how to use credit wisely.
Students should never feel embarrassed about not being financially stable, especially during college. With these finance tips, it will help ease some of the stress that succumbs students who are focused on their education.