As a college student, you may not exactly be focusing on your credit. With everything else you have to juggle including your schooling, extracurriculars, housing, and work, the last thing on your mind is your credit, but it may very well be one of the most important things to focus on during these crucial years.
The years you spend as a college student tend to be some of the most influential years of your finances. Not only does a college degree itself have a major impact on your future earnings, but how you manage your money during that critical timeframe will make or break your future plans. In order to help plan your financial future, we’ve put together some credit tips for college students.
Finance Less of Your Education
It shouldn’t come as a surprise that the average American college student is coming out of their university experience with nearly $30,000 in student loan debt. Many college students also don’t understand the rates nor terms of their college financing which causes trouble and big surprises once out of school.
In order to alleviate your student loan burden, consider taking fewer classes, working more, and prolonging your time in school to offset the amount of money you take out in loans. There’s nothing wrong with financing reasonable portions of your education, but financing an entire college education can leave you with a debt that can take decades to pay down.
If you have a plan in place for your future career, take into account your potential salary and housing expenses and see what sort of payment you can afford. Don’t be overly ambitious with these projections (i.e. don’t over-project your earnings nor short your living expenses). Be conservative with earnings and aggressive with living expenses and see where that puts you.
Use Credit Wisely
Colleges are hotbeds for credit card companies to wrap you in with some fancy swag and promises of what you can buy with your shiny new credit card. While credit can be very useful and actually help you earn rewards on the back end, it can also be a major downfall to your future if you’re not careful with it.
If you choose to have a credit card, only have one. Multiple credit cards are a recipe for financial disaster and can put you in a bigger bind than you could have anticipated. Managing only one credit card is doable. Just make sure you only buy essentials with it and pay it off monthly. Credit cards will also help you establish credit and show that you’re a worthy borrower.
Save Where You Can
The story of the “broke college student” isn’t entirely a rote piece of literature and actually seems to be truer than not across more colleges and campuses across the nation. However, you don’t have to play the victim in this story.
If you take college courses on a financial schedule that suits you and hold a paying job, there’s every good chance that you’ll actually be able to put money in the bank. If you can put some money into savings or even invest it in a 401k, then you can use that money or borrow against it when the day comes to purchase a home or make any number of other big financial decisions in your adult life.
If purchasing a home is something on your horizon, then get in touch with one of the loan experts at Tidewater Mortgage Services Inc, who can help you understand the borrowing process and give you more useful tips on how to save for your future!