College is a unique and special experience in a young person’s life. You might be on your own in a city far away from your home. There are your studies to attend to, friends to make, and being in charge of your own personal finances for the first time can be a little daunting. For the first time in your life there might not be anyone checking up on you. It’s all in your hands and with a little financial education you can begin to make smart financial choices that won’t wreck havoc on your future. Here are some important financial concepts for college students to understand fully.
1. Learn How To Save
Credit card companies specifically target college students, as do various department stores you frequently visit. They try to lure you into getting a discount on their merchandise if you open up a store card instantly. While it sounds very attractive to just put it on the card, and get your shopping fix what you aren’t looking at is the interest rate on these cards is usually around 25%. So that new TV or outfit will end up costing you double in the long run if you don’t pay it off right away.
Learn how to save your money instead of spending it. Even if it’s just 10% of your pay check from your part-time job or your tax refund. The interest you will accumulate by having a high interest yielding savings account will make you money in the long run. Plus, you will have a savings cushion when any life emergencies come your way.
2. Become an Asset
Whether you decide to get a part time job during college or intern during the summer, these opportunities will help you gain valuable work experience and strengthen your resume. The more skills you obtain work-wise during college, you will be able to better market yourself as a valuable asset to a company when applying to your first job. More experience can translate into a higher starting salary.
3. Watch Your Credit Score
Your credit score will follow you everywhere. It will affect the kind of apartment you can rent, credit cards, car loans, and a number of other services you need in life. It will especially become important when in the future you are trying to secure something big, like a home mortgage loan. You can check your credit score a few times a year for free by using AnnualCreditReport.com.
4. Consider Refinancing Debt
Did you purchase a car while attending college? If you financed your car you might be able to refinance it at a better rate once you graduate and gain employment. As your credit score improves, you should consider other opportunities to lower payments and interest rates on your outstanding debt.
It’s estimated that 94 percent of all college students incur some kind of student loan debt. After you graduate from college it might make sense for you to refinance student loans at some point. Student loan refinancing or student loan consolidation is the process in which you take out a new loan to pay off your old loans. The goal is that the new student loan has a lower interest rate, lower payments, or a combination of the two that make it more attractive than your old loans. This could potentially leave you with more money in your pocket and allow you to start off on the right foot after graduation.