Around 76% of college students go broke at some point during college. If you’re in college, you might not have much money right now, but hopefully, you’ll have a career soon that helps you make money.
If you’re in college, you might have some debts, and you might have some income from a part-time job. In any case, learning some more about personal finance for college students can help you manage your money and make wise financial decisions.
In fact, here are five important lessons that can help you learn how to manage your finances even while you’re in college. If you can learn these and put them into practice, they can benefit you for your entire life.
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1. Use Student Loans Only When You Need Them
As a college student, the most common type of loan you might acquire is student loans. While you may need to borrow money through student loans, the best personal finance tip you’ll ever learn is to borrow only what you need.
You might have access to more student loans than you need, but it’s not financially wise to borrow more than necessary. This principle is true with all loan types, and you can carry this principle out throughout your life when you need money.
There might be times when you may need to borrow money through other loan types, even while you’re in college. For example, if you need some cash for a few weeks while waiting for your student loans, you could use a personal loan.
If you borrow money, only borrow what you need. Secondly, make sure you have a plan for repaying the money. These are two valuable principles to apply to your life now and later.
2. Develop a Budget
The second lesson to learn now is to develop a budget and stick to it. Living on a budget is essential for financial management. If you have a budget, you’ll be less likely to make poor financial choices.
As a college student, you might not have a lot of money to work with right now, making a budget even more important. You’ll have some money, though.
The money you have might come from your parents, student loans, your bank account, or a part-time job you have. In any case, this is your income. You’ll need to know this amount to create your budget.
You’ll also need to know your expenses. When you compare these two amounts, you should have enough income to cover your expenses. If you have trouble creating a budget, look for budgeting tips.
You can also use cellphone apps for budgeting your money. There are many apps designed to help people manage their money, and you can look for the best personal finance app that you can find. Using an app helps a lot.
3. Get a Student Credit Card
The next lesson to understand as a college student involves credit cards. As a student, you may qualify for a student credit card. You may also qualify for a secured or unsecured credit card. In any case, getting a credit card is a smart move.
Getting a credit card is helpful for several reasons. First, it can teach you how to appropriately use a credit card. Learning how to manage a credit card is essential in life. Secondly, getting a credit card helps you build credit.
If you get a credit card now, it may have a low maximum credit line. Having a low credit line lets you have credit without having too much credit before you know how to properly use the card.
Even after you graduate college, you can continue getting and using credit cards. The best principle to apply to credit card use is to pay off your balances in full every month.
To do this, you must avoid making purchases that you cannot repay within one month. You’ll also need to make sure you have a way to pay your balance when the payment is due.
4. Cut Unnecessary Spending
The next lesson to learn as a college student is to cut unnecessary spending. If you don’t have a lot of money right now, you might not be able to get everything you want.
You’ll have to develop good decision-making skills when it comes to your purchases. Developing these skills now is something that can help you for the rest of your life.
If you learn how to cut out unnecessary spending now, you can carry this into your life after college. Here are three steps to help you with this:
- Plan your purchases
- Buy only what you really need
- Limit your purchases to things you can afford
For example, if you can’t afford to eat dinner at restaurants all the time, eat most of your meals at home. You’ll save a lot of money by doing this, and you’ll avoid racking up debt you can’t afford.
5. Protect Your Identity and Credit
Finally, it’s essential to make sure you protect your identity. College students don’t always think about this or worry about it, but it’s an issue that is extremely important.
Protecting your identity helps you prevent identity theft, which is a huge problem today. Identity theft occurs when someone steals your personal information and uses it to obtain credit and loans.
If you experience this issue, it can destroy your credit. Therefore, you’ll want to take steps to protect this.
Secondly, you’ll want to take steps to protect your credit. Your credit might not mean much to you now, but it will later. If you start protecting it now, you’ll have great credit when you graduate college.
Learn More About Personal Finance for College Students
Learning about personal finance for college students can help you develop effective and wise financial skills for a lifetime. If you are interested in learning more, check out our blog.
If you would like to apply for a loan, contact us at Bonsai Finance. We offer income-based loans and other types. Give us a call or check our website to learn more about the products we offer.