May 2009 e-Wealth Coach
Ted Beck is president and CEO of the National Endowment for Financial Education® (NEFE®), a nonprofit foundation dedicated to helping all Americans acquire the information and gain the skills necessary to take control of their personal finances.
Helping College Students Save
Dear Saver,
There is no arguing that the cost of going to college is probably the single largest investment you will ever have besides buying a house. The expense of attending a four-year private university can easily reach six figures. Even a public university cost is about a third to half as much. That is a lot of money.
But as expensive as attending college can be, there are a number of things you can do to trim the cost and still ensure you have both an educationally rewarding experience and a fulfilling collegiate life. In college, you often transition between living at home and living on your own. It is an opportunity to learn how to develop, and then live, on a budget, spend wisely and understand the benefits and limitations of using money as a tool.
There are plenty of resources available to help you. Our Smart About Money website serves students by giving them the tools and encouragement to make smart money decisions. If you are in college now there are some simple things you can do to save and use your money more wisely.
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Whether you plan to live on or off campus, buy a meal plan ticket that meets your real needs. Most schools offer a variety of meal plans reflecting the number of meals you plan on eating on campus each week. It is not unusual to save $1,000 a semester by picking the right meal plan.
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If you have a car and don’t use it, leave it at home with your parents. You could save hundreds of dollars a semester on parking costs and avoid potential extra penalties like the occasional on-campus parking tickets.
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You can save by buying books online rather than at the school bookstore, but use extra diligence when ordering. College texts are frequently updated and an outdated text is useless. You may have trouble selling it to the bookstore or to another student at the end of the semester. If you buy online, get the text ISBN number from your professor first and make sure you get the right edition.
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When it comes to student loans, borrow only the amount you need for educational expenses. Be sure to shop around for the best deal and avoid the temptation to get extra money for clothes and entertainment. In fact, student loan money must first be used to pay for tuition, fees, and room and board.
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And of course credit card companies love college students. If you must have a credit card, get one without an annual fee and with a low interest rate. Try to use it only for emergencies and pay off the balance at the end of the month. If you don’t pay it off in full, always make your payments on time to avoid late charges and protect your credit score.
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Set aside a small amount of money for emergencies. Having a few hundred dollars in the bank allows you to weather minor financial surprises and difficulties, like an unexpected trip to the hospital or a plane ticket to visit a sick family member. For some students, keeping an ‘emergency only’ credit card may be the only option, but again, be careful about making your payments on time.
While these ideas may not sound like much, small changes in how you spend money while at school can leave you with hundreds, maybe thousands, of dollars in your pocket for some of the fun things college has to offer. Want more? Here is 40 Money Management Tips Every College Student Should Know.
Also, don’t underestimate your ability to manage your money. Budget, control spending, use credit responsibly, save when you can and you will be a smarter student.
Ted Beck
President, NEFE
CashCourse (www.cashcourse.org), produced by NEFE, provides schools across the country with information to help students make prudent decisions while in school. Students should encourage their schools to enroll by directing them to www.CashCourse.org.