Fourteen years ago this month I was nervous about what was about to transpire. At this time. although I had been away from home for extended periods of time, I was about to leave for college. Honestly, I thought I might be biting off more than I could chew. Rather than living at home and attending a local college like a number of my high school classmates, I was preparing to live on the campus of a major university in another state.
I should have known that I had little to worry about. But there are a few things I wish I had known — or at least thought about — before entering college.
Pay attention to your expenses. For me, my expenses were fairly controlled. On campus, I had a meal plan. My breakfasts, lunches and dinners were paid for in advance and rolled into my tuition and board expenses. In order to eat in one of the many dining halls, all I had to do was flash my student identification card. This meal plan entitled me to a certain number of meals per week in addition to an allotment of “points” which can be used to purchase snacks at other times.
The meals and points expired at the end of each semester, and the college reminded students that “It is [their] responsibility to budget [their] points over the course of the semester/session.” I don’t recall doing any budgeting. I may have known at the time how many meals and points were available to me, but I didn’t do any planning. I ate when I felt like it and bought snacks and other things at the university’s shops when I desired. There was an option to add points to the account, and I’m sure I did this as needed.
Who is paying for college? My undergraduate education was paid for by my parents, a partial scholarship, and loans in my name. If your parents are paying for your education, be careful not to fail any courses. If you fail a class required for your degree, you will have to take that class again, paying for it twice. It’s not worth it, particularly since it’s usually difficult to outright fail a class. Paying for college yourself supposedly gives you ownership of your academic decisions while in school, but if you’re in a situation where you don’t have to worry about affording your own tuition, then consider yourself lucky.
Work shouldn’t interfere with studies. I am quite grateful I didn’t have to pay for most of my undergraduate education. It allowed me to focus on my education and extracurricular resume-building activities in my field rather than focusing on earning income to afford tuition. I did find a few jobs, however. I stayed on campus for winter and summer sessions to take more classes, but with a lighter load during these in-between semesters, I worked in the department library to earn some extra money. I also served as a web consultant in my department, designing their first departmental web site and teaching professors how to publish their own sites for a measly ten dollars an hour.
These jobs provided me with a little extra cash. I probably spent it just as fast as I was earning it, however.
Open a Roth IRA. I wish I had known about Roth IRAs when I started college. It would have been impossible for me to do so without a crystal ball or some other form of premonition. These retirement accounts were brought into existence while I was enrolled in the university, but I did not hear of it until a few years after I had graduated. If I had known that I could put money away for retirement in a tax-advantaged account while I was in such a low tax bracket, I might have taken advantage of the opportunity. Then again, I might not have. It’s hard to imagine retirement before you’ve officially begun a career, but it’s harder to argue with long-term investing in the stock market. If I had invested $1,000 in the S&P 500 index on October 11, 1996, it would be worth $1,825 now (not including reinvested dividends) and much more by the time I retire.
Like many, I played the “stock market game” in elementary school. By the time I entered college, I probably knew only a little more about investing, but my interests lay elsewhere so I did not particularly think about having a secure financial future.
Avoid credit cards. The credit card companies are vultures on college campuses. I remember when I first arrived on campus as a freshman for orientation, one week before the upperclassmen. The companies set tables outside the dorms with applications and free tee-shirts, enticing subfashionable freshmen like myself to sign up. Although I escaped relatively unscathed, having a credit card without a job is asking for trouble.
One particularly sneaky aspect of college-geared credit cards is the introductory offer. The 0% APR on purchases deal sounds great, but what they don’t explain is that you must pay off your entire balance on the card before the promotional period ends, otherwise you could owe back interest as if the 0% APR promotion never existed. It’s always explained in the fine print, but if you have an appointment for orientation, chances are you just want to sign the form and grab the tee-shirt.
Forbes offers these thirteen financial tips for students entering college for the first time.
- Use credit cards sparingly
- Pay all credit card balances in full
- Get the best deal on a checking account
- Start saving
- Keep track of your spending
- Set a limit on entertainment
- Shop at second-hand stores
- Keep an eye out for free money
- Get a part-time job with tips
- Walk or ride a bike — don’t drive
- Avoid the tax on stupidity
- Look for student discounts
- Don’t eat out all the time
Tavis Smiley has a number of similar suggestions. He suggests making a budget, shopping smart, and learning to cook.
Had I known what I know now about compounding interest and the tendency for the stock market to increase over time, not just theoretically but from experience, I’d be in a better financial position right now. And it’s not about having more money, it’s about having more options for doing the things I like to do.
Photo credit: Éamon
13 Financial Tips For College Kids, Scott Reeves, Forbes, August 30, 2004
Financial Advice for College Students, Tavis Smiley
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{ 5 comments… read them below or add one }
This is a great read. I especially like the part about knowing who pays for your college. It makes sense to try even harder when it’s someone else footing the bill!!
One thing I found is that going to school in larger city makes it easier to find part time jobs, internships, and better paying jobs.
In smaller cities the student body makes up a significant part of the population and can completely dilute the job market.
Great post. I was “fortunate” to pay my own way through college. Of course Uncle Sam helped me with Stafford loans but I will always remember what my parents told me before I left my hometown for college. They said, “Hey have a good time. If you want to stay there for 6 or 7 years go for it. You’ll have a blast but remember you’ll be paying for it.” I was out in 4 years on the dot! As painful as this was, it taught me some financial responsibility. I also worked throughout my whole college career. If I had done anything different I would have followed your advice on avoiding credit cards. I signed up for every little $500 limit card I could get my hands on. While I always made my payments, I spent more than I needed to while making my meager part-time job wages.
Good post as always! I, too, wish that I stayed more within my means during college on the credit card side.
One point that I have to disagree with is “not to let work interfere with your studies.” I’m not trying to pat myself on the back, but I worked full time — the whole time — while going to school full-time and I have to tell you, its the best move that I could have made. Upon graduation, when most of my fellow graduates had to start in the low 30’s because of lack of experience, I was running the accounting department that I had worked in during the years at school. I think as Bachelor degrees become more and more prevalent, experience will count for a whole lot more down the road, so knock out 2 birds with 1 stone and try to work in a job that you can grow with AFTER college (not at Krispy Kremes {not that there’s anything wrong with that})!
A very comprehensive post here and great pointers for students starting on the final part of their journey to “adulthood”. I did a recent post on this topic as well and I would say you need to be cautious with part time work. Extra money is great while at college, and necessary in some cases, but don’t forget why you are here – to learn! When I was in college (or university as I called it) I knew a class mate who had 3 part time jobs (2 night jobs and one daytime retail role). This was great for his cash flow and he was always the biggest spender of the group. It also made him popular with others who would count on him for a round of drinks whenever he was at the bar. However, he sacrificed valuable study time for working (and maintaining an active social life) which meant he fell behind in his studies, including missed classes. He finally got back on track when he had to repeat and pay again for the entire semester, but still graduated a year after the rest of us. In financial terms, the opportunity cost of graduating a year later is equivalent to one year of salary from a full time job and the additional tuition costs – far more than most part time jobs are worth. Also you will be one year behind your peers in experience and top employers prefer not to hire students with poor grades. Money from part time work is great in the short term, but don’t over do working while at college because you could be sacrificing much more in the bigger scheme of things.
I like the Roth IRA option, but would be cautious of entering it unless you have enough free cash flow to last through college. Credit cards are dangerous, but do provide a lot of cash flow flexibility if used properly.