Avoiding Being Broke: 5 Financial Tips For New College Students

broke college students save money

Avoiding Being Broke: 5 Financial Tips For New College Students

College represents the first step in your transition from adolescence to adulthood. One way to increase your odds of success to be financially savvy. Let’s take a look at some ways that college students can make smart choices with their money and avoid going broke.

Credit Cards Are Not Extra Money

Unless you have the money to repay a credit card balance in full each month, keep your credit card usage to a minimum. Even if you could pay your credit card balance in full at the end of the month, it may be better to hold off on charging unnecessary purchases and using your cash to start paying down student loans. If you don’t have student loans, use that money to start saving for retirement or for a home.

Learn Everything That You Can About Interest

The reason why you don’t want to use a credit card unnecessarily is because you have to pay interest on that debt. This means that the $500 you spent to buy a plane ticket to Hawaii could balloon to over $1,000 or more if you only make minimum payments on that balance. Typically, the amount of interest that you pay on a loan depends on how long you let a balance linger. Therefore, paying off a student loan, car loan or home loan as quickly as possible will limit the amount you actually spend over the life of the loan.

Look for Free or Discounted Goods Whenever Possible

There are a variety of websites such as FreeCycle that connect you with people who have things that they are looking to give away. Sites such as Amazon or eBay may provide discounts on almost everything from a new computer or smartphone to that textbook you need for class.

Leasing May Be Better Than Buying

Leasing a vehicle may be a better option for those who are looking to keep expenses to a minimum. Lease payments are usually lower than what you would pay when you buy a car outright. A typical lease runs for two to three years, and it may be possible to trade the vehicle in if you want or need something different before it runs out.

Understand the Difference Between Value and Price

Price is the amount of money that you pay for something, but value is how much you actually get for your money. Consumers of any age are urged to do their research before making a purchase. Doing so allows an individual to buy a product that meets his or her needs and holds its resale value for years to come.

Your college years are challenging enough trying to keep your grades up and looking for internships and other work experience. Doing whatever you can to save money and become financially literate may make it possible to get through school with as little debt as possible. If you do have debt, knowing how to manage your money makes it easier to create a plan to eliminate it as soon as possible.

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