Heading off to college for the first time can be at once exciting and overwhelming for freshmen. The independence that comes with living away from home may be liberating, but it also comes with new responsibilities, including financial responsibilities.
As Corey Carlisle, executive director of the American Bankers Association (ABA) Foundation, said, “Freshman year marks the first time many students take control of their everyday finances, so it’s important to establish good habits from the get-go.”
He noted that freshmen have other big adjustments to make—social and academic adjustments among them—and financial challenges can sometimes be overlooked as a result.
The ABA listed common missteps college freshmen should avoid when it comes to financial matters, and we have compiled a few broader tips that apply to the range of adjustments freshmen are faced with as they settle into college life.
1. Common mistake: Not creating a budget
“You’re an adult now and are responsible for managing your own finances,” ABA said. “The first step is to create a realistic budget or plan and stick to it.”
In tips listed at LiveCareer’s Quintessential Careers, a career development website, the site’s founder, Randall S. Hansen, noted, “Keep track of your money. If you’ve never had to create a budget, now is the time to do so. Find ways to stretch your money—and as best you can, avoid all those credit card solicitations you’ll soon be receiving. The average credit card debt of college grads is staggering.”
2. Common mistake: Overspending
Hand-in-hand with creating a budget is not busting it. ABA recommended freshmen keep receipts and track spending in a notebook or in a mobile app. “Pace spending and increase saving by cutting unnecessary expenses like eating out or shopping so that your money can last throughout the semester,” ABA said.
3. Common mistake: Overextending credit card usage
Being a college freshman is a time for adjustment. But freshmen should know that, starting now, how they handle their credit will have consequences—positive and negative—well after graduation.
“Understand the responsibilities and benefits of credit,” ABA said. “If you have a credit card, use it without abusing it.”
ABA also recommended shopping around for a card that best suits the need of the individual.
4. Common mistake: Neglecting to take advantage of the bank’s resources
Banks offer a range of tools, such as online and mobile banking tools, that can help freshmen stay on top of their finances. Freshmen should leverage these tools to check balances, pay bills, deposit checks and monitor transaction history.
5. Common mistake: Overlooking “free” money
There may be no such thing as a free lunch, but there is money available to students who know how to look for it. “Apply for scholarships and look for student discounts or other deals,” said ABA.
6. Common mistake: Buying everything new
Books are expensive. ABA suggested freshmen consider buying them used or ordering them online.
In an article posted on his website, Matt Might, associate professor in the School of Computing at the University of Utah, wrote, “Textbook pricing is morally bankrupt. Never pay full price for a textbook. Check online for cheap prices on used textbooks. Sometimes, a professor orders a textbook for only a couple of its chapters. In this case, borrowing the book from the school library is the best option.”
7. Common mistake: Not using your bank’s ATM
Bank fees add up. Freshman should avoid them, ABA said, by using ATMs owned by or affiliated with their bank.
ABA recommended taking out larger sums of money when it is not possible to use an owned or affiliated ATM to avoid having to got back multiple times for withdrawals.
An article at Bankrate about avoiding ATM fees also suggested getting free cash back from debit purchases. “Avoid ATMs entirely by requesting cash back (usually restricted to amounts under $100) when paying for your weekly groceries, gas or at any retailer,” the article stated.
8. Common mistake: Not saving for emergencies
Freshmen should put money away as soon as possible, no matter how little the amount, for emergencies. “Things happen,” ABA noted, “and it’s important that you are financially prepared when your car or computer breaks down or you have to buy an unexpected bus ticket home.”
9. Common mistake: Being afraid to ask questions
“This is a learning experience,” ABA said, “so if you need help, ask.” Freshmen can start with their parents or their bank, and, as ABA noted, the sooner, the better.
10. Common mistake: Freshmen living beyond their means
Living within means is the theme throughout ABA’s suggestions, whether it’s creating and sticking to a budget, not overspending or taking advantage of student discounts and scholarships. ABA said, “Limit your ‘hanging out’ fund. There are lots of fun activities to keep you busy in college and many are free for students. Get the most from your student ID. Use your meal plan or sample new recipes instead of eating out.”
Bonus tips for financial and academic success
Among Hansen’s 25 tips at Quintessential are a few that cut across multiple challenges college freshmen face. Most importantly:
Get organized—Hansen noted students are expected to be prepared in college. Buying an organizer, getting a wall calendar or using mobile apps will not only help with keeping finances in order, as ABA suggested, but will also help freshmen stay on top of assignments. Hansen said college is different from high school, where teachers often lead students through homework and due dates. College professors expect students to be prepared on their own.
Take responsibility for actions—Hansen wrote in his tips that students should not look to place blame on others for mistakes. He offered advice that applies to students and professionals in all walks of life: “Being an adult means taking responsibility for everything that happens to you.”
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