David Lerner Associates: 5 Financial Lessons for College Students
Millions of young Americans will be leaving home for the first time this fall. Along with many other freedoms they’ll experience, they will also have to manage their own finances, probably for the first time. Here are five financial lessons for college students:
Checking Account: Look into options at different banks. Open an account at the bank that offers no fees, no monthly minimum balance needed, and at least one ATM on campus. Keep track of spending, so that you don’t run out of money and end up with overdraft charges. It’s important to know exactly how much money you have in your account at all times.
Stick to a budget: The best way to control your spending is to have a budget. Figure out what you need, what expenses you will have, and how you plan to cover those bills. Getting a part-time job can help – even at minimum wage, working 15 hours a week pays for a lot of extras, and the experience will look good on your résumé when you graduate.
Credit Cards: It’s good to have a credit card for emergencies, but use it only in a real emergency. Getting into debt is never a good idea. It’s easy to get a credit card today, and it can be a good way to build up your credit history. It requires discipline, and if you run up the card and can’t afford to pay it back, it will backfire on you. Make sure you read the fine print, and understand all the terms and conditions of the interest, finance charges, and payments required. You need to know exactly what you’re signing up for. If you don’t understand it all, get someone to explain it to you.
Student Loans: Starting your life with a mountain of student loan debt can put a serious damper on your future plans. When you graduate, your income might be higher than someone without a degree, but it’s not going to make you wealthy. Keep your student loan debt as low as possible, or those payments will take a chunk of your salary each month.
Protect Against Identity Theft: Identity was the No. 1 problem reported to the Federal Trade Commission in 2014. They received 332,646 complaints, up from 290,099 a year earlier. [2]
A recent study by Javelin Strategy and Research revealed that college students are very susceptible to identity theft, and they’re the least likely to detect it themselves. In fact, almost a quarter (22%) of students who suffered identity theft found out when they were called by a debt collector or when they applied for a lease or a loan. [3] Now that financial information is on your phone, make sure that you keep it secure. Put an app on the phone that lets you log in with a fingerprint, and sign up with your bank for alerts on suspicious behavior on your account.
Going to college can be fun, exciting, and give you a sense of independence. Putting these financial lessons into practice will help ensure that you enjoy it all.
IMPORTANT DISCLOSURES
Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. This material does not constitute an offer or recommendation to buy or sell securities and should not be considered in connection with the purchase or sale of securities.
To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.
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David Lerner Associates does not provide tax or legal advice. The information presented here is not specific to any individual's personal circumstances.
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