Back to school is almost here and today I wanted to introduce a new series to you guys…
How-to Become a Financial Stud In College.
What’s this all about? It’s going to be a series of articles published every few days here to help college students get on top of their finances so that they can have their money in order. Let’s stress about planning our Friday nights, not our finances. I’m not going to teach you how to be financially literate or anything boring like that! I just want you guys to take care of your financial stuff so that you can focus on what really matters to you in life (academics or predrinking on the weekend).
Who’s the series for? College students that want to get their stuff together when it comes money! You’re going to see how to budget your money without losing your mind.
Let’s not waste any more time with the introductions and get right into the first part of the becoming a financial stud in college series…
Part 1: Set everything up aka get your financial stuff in order!
You need to become accountable for your finances (as much as possible, nobody’s perfect!). Before you can start to worry about making more money, optimizing your spending, or consolidating student debt, you need to have everything financial in order.
How could you possibly discuss finances in college without mentioning credit cards? At this point (where credit cards come into play) some college students will have acquired their own credit card or been given one by their parents for emergency situations. Regardless of how you obtained it, a credit card is in your possession. My opinion on credit cards becomes irrelevant at this point. I can however share thoughts on how you can make a credit card work for you. Below are a few tips to get your financial house in order when it comes to credit cards:
- Keep the smallest limit. When you first get a credit card, you should keep your credit limit as low as possible until you gain complete control of your spending. For the first year my credit card limit was at $500 until I was ready to increase it.
- Check your bill every month. I highly recommend going over every credit card bill to ensure that everything is on par. Not only do you want to ensure that you’re not being ripped off, but it’s important to see where and how you’re using your credit card.
- Pay your bill on time. This goes without saying. Paying on time saves you money because you really don’t want to start paying those high interest rates.
- Increase credit limit as your spending improves. Once you find yourself paying off your credit card on time, you might be ready to amp up your limit and focus on building up your credit.
Most of us either have an online banking account or an account with a brick-and-mortar bank that offers online banking. A few things to watch out for as you strive to setup your online banking account:
- Look for easy-to-use customer interface. I love my ING Direct banking account because of how idiot proof that it is (perfect for me!). Everything is so easy. I can create sub-accounts in seconds. I can also transfer money in and out in no time. Customer experience is extremely important when it comes to managing your money online.
- Don’t stress about interest rates always. I keep on getting emails from various online savings accounts informing me of interest decreases. It sucks but what can you really do? Interest rates are low across the board. Instead of switching bank accounts every time that rates are low, I suggest you focus on finding a bank account that you trust and one that provides exceptional customer service.
You need to pay your bills, on time, every time! I personally set up all of my fixed monthly payments (cell phone, gym, online stuff) to be automatically charged to my credit card every month. A few tips in regards to automated payments:
- Still check your payments. Just because your payments have become automated, this is no excuse for not tracking them. A few months ago my gym over charged my a bit too much. Thankfully I checked my credit card statement on time and was able to notify them right away. Then last month I was charged more money again. Unfortunately, this time the extra charge was due to a new tax in Ontario. Oh well.
- Cut when necessary. It really isn’t that hard to cut an automated payment. If you’re tired of that subscription or no longer use the gym anymore then don’t hesitate to cut it out. I’m not suggesting that you cut everything fun out of your budget, but it’s advisable to cut when you don’t feel it anymore (just like with dating).
Keep track of expenses vs income.
How much you earn is just as important as how much you save. Actually, you can argue that how much you save is even more important because what’s a $60K salary worth after college if you squander all of the money away?
Use technology or keep it simple. I tried doing the whole Excel thing to keep track of my finances but it just never worked. I found the best results in the past with the classic budget– paper and pen. Recently though I’ve been using the My Budget app for my iPhone. I don’t track every purchase but I keep track on my relevant major expenses so that I can plan ahead and be ready for the down turns.
Do NOT count every penny. I’m going to tell you right now not to count every damn penny! When I talk about tracking your money, I think it’s important that you keep track of your major fixed & variable expenses, and the money coming in so that you can be realistic with your spending. A final note: it’s crucial that you set aside some money for care free spending. I always have a small amount of money each month that I let myself spend on anything that I want to (from clothing to eating pizza at night).
Don’t worry you don’t have to set up all of your financial stuff at once. This is just simply the first aspect of becoming a financial stud. Stay tuned for part 2 of the How-t0 become a financial stud series.