{"id":8024,"date":"2017-01-05t09:09:46","date_gmt":"2017-01-05t17:09:46","guid":{"rendered":"\/\/www.catharsisit.com\/hs\/?p=8024"},"modified":"2021-01-06t15:54:41","modified_gmt":"2021-01-06t23:54:41","slug":"personal-finance-college-bound-student","status":"publish","type":"post","link":"\/\/www.catharsisit.com\/hs\/college-admissions\/personal-finance-college-bound-student\/","title":{"rendered":"personal finance for college-bound students"},"content":{"rendered":"

\"personal
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\ncongratulations, magooshers! you got into a good college. i\u2019m sure you feel a big sense of relief. a long, stressful journey is finally at its end. let\u2019s take a moment to appreciate your accomplishment.<\/p>\n

pause for appreciation. <\/strong><\/p>\n

okay, there\u2019s a lot to do between now and your first day of college. there are trips to bed, bath, and beyond to buy dorm supplies. there is waiting to find out who your roommate will be. there is high school graduation, another good reason to celebrate. finally, there is creating a personal finance plan that will see you through your time in college.<\/p>\n

depending on you high school, you may have already taken a personal finance class. if so, feel good about that, too. yet you can\u2019t learn everything in a class. sometimes, what you learn isn\u2019t the best advice, or doesn\u2019t reflect what managing money is like in the real world.<\/p>\n

as life experience will teach you a lot about personal finance, in this article, i\u2019ll throw in a few personal stories so you can learn from my experiences. that being said, let\u2019s talk money!<\/p>\n

sign up for a checking account<\/h2>\n

paper checks (or cheques) may be going the way of the dinosaurs, but checking accounts are still the best first step towards having a successful personal finance plan.<\/p>\n

you need to choose your first bank. for many of you, this will mean setting up an account with either bank of america or wells fargo. these two banks have many atms across the united states. by all means, do your research. there may be other, better options depending on the state where you live.<\/p>\n

another thing to keep in mind is that some banks charge a monthly fee for checking accounts, especially if your account falls below a certain level. unless it absolutely can\u2019t be helped, avoid these banks like the plague. you shouldn\u2019t have to pay a bank for the privilege of sitting on your cash.<\/p>\n

with a checking account comes a debit card. we\u2019ll get into the difference between debit and credit cards in a bit, but there\u2019s one big rule<\/strong> to remember at this stage. treat your debit card like cash, and you\u2019re good to go.<\/p>\n

get a job<\/h2>\n

cue the music<\/em><\/a><\/p>\n

now that you have that checking account, you need to put some money in it. what to do? what to do?<\/p>\n

oh yeah, get a summer job (or two)!<\/p>\n

i know; you\u2019d rather be spending your summer hanging out with friends, many of whom will be moving far away come late august. even so, the summer before freshmen year is a rare opportunity to build up some savings. and when i say \u2018savings,\u2019 i don\u2019t mean savings for retirement. i mean savings for all the costs of college that aren\u2019t tuition, dorm fees, and a meal plan. and for that, magooshers, you are going to need a good chunk of change.<\/p>\n

if you take 30-40 hours of each week and commit them to a summer job, your wallet will thank you during your freshman year. believe it or not, many of your friends will be doing the same thing. they\u2019ll be busy, and you will be, too.<\/p>\n

you\u2019ll still have time to hang out and have fun. trust me.<\/p>\n

once you start making money, then comes the challenge not to spend your money the second you make it. debit cards are as easy to use as cash, and for many inexperienced teens, money has the tendency to burn holes in their pockets. to make sure the money stays safe for a few months, here\u2019s an idea from my playbook.<\/p>\n

back in college i worked at blockbuster video (r.i.p.)<\/a> to save money for my study abroad program. i did this over two summers and one winter break. to make sure i wasn\u2019t tempted by my savings, i put my money in a c.d. (certificate of deposit)<\/a>. c.d.s are special bank accounts that exist for as little as one month all the way up to 5+ years. the rule is that until the account \u2018ends,\u2019 you can\u2019t touch your money. if you tried to, you\u2019d have to pay a huge fee.<\/p>\n

so if you want to keep your money safe during summer, i\u2019d suggest a 2-3 month c.d. you\u2019ll even earn a tiny bit of interest, too!<\/p>\n

so it\u2019s late august, and you\u2019re off to college. to make sure your money lasts, there\u2019s one final piece to the personal finance puzzle…<\/p>\n

budgeting
\n<\/strong><\/h2>\n

growing up, there were many nights when i did my homework at the dining room table. across the table, my mom or dad would be doing the family\u2019s monthly budget. every month they printed out a one-page spreadsheet that listed their expenses. there was a space for the mortgage, food, vacations, electric\/water\/gas bills, fun money, and a couple of other categories that i can\u2019t remember. all of this money was in their checking account, but by splitting it up on paper, they could figure out if they were over or under-spending each month. doing this, my parents were able to create a nice retirement nest egg, which they are currently enjoying.<\/p>\n

thankfully, your budget in college won\u2019t be as complex as my parents\u2019 or other adults living on their own. also, there is only one big rule<\/strong> to remember when it comes to budgets. once you\u2019ve exhausted the money in a certain category, that\u2019s it, you\u2019re done. spend all your fun money on the first saturday night of the month? that\u2019s nice, but expect to stay in for the next three weeks.<\/p>\n

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\"personal<\/p>\n

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now, you won\u2019t always be perfect with your budget (i\u2019m not), but budgeting will help you save money, something that is really tough in 21st<\/sup>-century america. you\u2019ll still be a \u2018poor college student,\u2019 but at least you won\u2019t be in debt.<\/p>\n

and speaking of debt\u2026<\/p>\n

credit cards aren\u2019t evil (unless you let them be)
\n<\/strong><\/h2>\n

when i took personal finance in high school, my teacher really hated credit cards. he thought they only existed for credit card companies to \u2018enslave\u2019 people with crushing debt. his entire curriculum basically told us not to buy things unless we could pay cash. though he was teaching with good intentions, and probably had a bad credit card experience as a young man, i think he went a little overboard. here’s some good tips to make sure that no credit card ever turns ‘evil’ on you.<\/p>\n

start with a debit card<\/h3>\n

debit cards, like credit cards, are little plastic rectangles with magnetic strips on the back. yet instead of charging money for goods, every swipe of a debit card takes the money directly out of your bank account. if you want to buy awesome thing, but don\u2019t have the money in your account, awesome thing stays on the shelf.<\/p>\n

debit cards were also the beginning of my credit card journey as well. for the first two years of college, i only had a debit card. i had to check my balance each month to make sure i had enough money. at the same time, i had a simple budget so that i keep track of my spending.<\/p>\n

when you do get a credit card, have a low spending limit<\/h3>\n

once you\u2019ve had a debit card for a while, it\u2019s time to get your first credit card. my advice: start small. there are a ton of credit cards out there, and most of them are for people who have had a credit card for a long time. these cards have perks such as airline miles, cash back, and other goodies. for your first card, stay away from the goodies.<\/p>\n

many credit card companies, such as visa and american express, for example, have simple, no fee credit cards for first timers such as yourself<\/a>. they aren\u2019t flashy, but they are your foot in the door when it comes to credit. they also have a low spending limit. for example, if you go above $1,000, the card cuts you off. these \u2018breaks\u2019 exist to make sure that young people don\u2019t ruin their lives by going into thousands and thousands of dollars in debt. after all, when you graduate and get a job, you can always get a new card with perks and raise your spending limit.<\/p>\n

so once you get your first credit card, keep track of your purchases, and pay it all off at the end of the month. most people don\u2019t go into debt because of their purchases, but because of the high interest rate that comes with their card.<\/p>\n

but, you may ask, if i treat my credit card just like a debit card, why do i have to get a credit card at all?<\/p>\n

good question. you’re doing this to raise your\u2026<\/p>\n

credit score<\/h3>\n

you\u2019ve probably seen the commercials: check your credit score online, for free! other commercials portray poor people who find out too late that their credit score is really low! but what is a credit score, and how does it affect your life?<\/p>\n

first of all, credit scores are completely made up, but important numbers. in a nutshell, there are three credit bureaus (experian, equifax, transunion). these bureaus compile information regarding every person in the u.s. with a credit card. in examining the data, they ask themselves some key questions:<\/p>\n