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September 09, 2016 at 10:52 AM
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.
(Related: 30 Best Paying College Majors: 2016 and 20 Best Cities to Start a Career)
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.
