No matter your major, you can graduate from college with an honorary degree in personal finance by paying attention to where your money is coming from and where it’s going.
Here’s how to get started:
Set a budget
Start by identifying the income sources you’ll have in college, such as wages from a part-time job, scholarships and financial aid. Then estimate how much you’ll be spending. You can probably ballpark costs such as tuition, room and board, school supplies, laundry and transportation.
You should also allocate some money for discretionary spending, such as food outside your meal plan and entertainment. Consider limiting these expenses with a weekly allowance.
Your budget can show you when you need to cut back on spending and when you can afford a treat. If you need help, try an online tool like Mint.com.
Apply for the right financial aid
There are two main types of student loans: federal and private. It makes sense to borrow as much as you can in federal loans before resorting to private ones, because federal loans generally have lower interest rates and broader repayment options.
Fill out the Free Application for Federal Student Aid, or FAFSA, to get federal loans and see if you qualify for need-based aid, including grants, work-study and some scholarships.
Do your best to figure out how much you’ll need before you take out loans, whether they’re from the government or a private lender. Either way, you’re on the hook to repay them, so borrow only what you have to.
Manage credit cards responsibly
Credit cards can be tricky, particularly if you’ve never had one. They’re useful tools for building a credit history — but they’re also fraught with danger if you overextend yourself.
To get the greatest benefit out of a credit card, use it wisely. That means paying off your balance in full each month to improve your credit score and avoid costly interest charges.
It helps to view your credit card as you do your debit card: You can’t spend what you don’t have. Speaking of debit cards, make sure you don’t authorize your banking institution to charge an overdraft fee if you inadvertently withdraw more money than you have in your account.
If you want a credit or debit card, consider getting one from a nonprofit, member-owned credit union like Wauna Credit Union. These financial institutions generally offer lower interest rates and fees than traditional banks.
Take advantage of your student status
Many major companies offer student discounts. Among them: Amazon, Apple, Microsoft and Banana Republic. If you’re hoping to make a purchase and the merchant hasn’t advertised a student discount, there’s no harm in asking.
You can also save money on textbooks by buying used copies from websites such as Abebooks and Chegg.
A degree doesn’t guarantee you a great-paying job. But college graduates still generally out-earn people without degrees, according to a 2014 report by the Pew Research Center.
And this much is certain: Developing smart budgeting and spending habits in college will continue to pay off long after you graduate.
Peter Lewis, NerdWallet
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*Thanks to our friends at NerdWallet for this informative guest blog!