As you venture out into the world as a college freshman, you’ll find your newfound freedom also comes with responsibility. For example, the financial decisions you make now may determine whether or not you live comfortably later. Having some guidelines can help eliminate unnecessary spending, in addition to, earning you more money in the process.
Here are some tips to help you make better financial decisions:
Set aside extra finances to cover any emergencies. Otherwise, a sudden expense could clear out your funds, potentially leaving you in debt. A good rule of thumb is to save about 10% of the money you receive. If you want to step up your savings game, then consider opening another bank account to house your emergency fund. Your main account will then be where you handle your day-to-day expenses and bills.
Most people apply for their first credit card in college or post-graduation. While they are convenient in some instances, you need to be careful how you are using your card. For example, do not maximize your card’s credit limit. Instead, try to keep your credit usage at around 30% of your total limit. The more money you owe, the more you will feel the bite of your card’s interest rate.
Another strategy to keep you out of debt is to only use your credit card if you have the money already sitting in your bank account (or in cash) to pay for your purchase. Set that amount aside until it is time to make the payment. This will limit overspending while also helping you build a good credit score. Later, a high score will land you better cards and deals on interest rates/payments.
One of the freedoms available to you now is experimenting with your investments. The earlier you start investing, the more you will make thanks to compound interest. Take time to explore options like high-risk, high-reward investments like cryptocurrencies or stocks, as well as, more traditional forms of long-term investments like an IRA.
The goal here is to make your money work for you. This means instead of having all of your money sitting in a checking or savings account, it is doing something like accruing interest. Take a minute to look through our various investment opportunities.
Food can take up most of your budget if you do not plan accordingly. From fast food splurging to snacks, this daily expense has enough teeth to take a bite out of your budget. By outlining your expenses for food, you’ll always think about ways to make the most of it. You might consider looking at cheaper, but still filling, options.
You can also plan out your groceries ahead of time. When you know exactly what you want to buy, you can control the amount you spend on food. A little bit of research before your grocery run can give you access to more affordable, yet equally satisfying meals.
Part of learning how to be better with money is making a few mistakes along the way. Don’t put yourself down if you made a mistake with the money you spent or put it in the wrong investment. You are still a college freshman, and in the phase of your life where you can recover from any financial mistakes. As long as you keep improving and developing good habits, you’ll always be fine.
Plus, you don’t have to walk this road to financial independence alone. We are happy to speak with you about accounts (checking, savings, and share certificates), credit cards, and what’s best for you. So give us a call or stop by the office today!
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