The beginning of college can be a whirlwind. And among all the parties, early-morning coffee runs and late-night pizza binges with your suitemates, it can be easy to let something important slip through the cracks: money. But now that youâre settling into a routine on campus, itâs time to take a look at your finances. Whether youâre working your way through college or getting help from the ârents, basic money management should start long before you get your first Real World, big-girl paycheck. We talked with Cara Newman of Learnvest.com (a user-friendly website offering women information and advice on personal finance) who shared her top advice on what every savvy college girl needs to know about money.
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Make a budgetâand stick to it!
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The first step to good personal finance is knowing how much money you haveâand where you spend it. To make a budget, first write down all of your income sources. Then write down your expenses and split them into âneedsâ and âwants.â Monthly expenses like rent, food and your phone bill are obviously needs, but other areas (like clothes) are trickier, so be honest. âSomething like a winter jacket might be a need, but a sequin dress would be a want,â says Newman.
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When youâre figuring out how much you spend on what, you want to be as precise as possible. âItâs hard to make a realistic budget if you donât know what youâre actually spending,â says Newman. If you arenât sure, keep a spending journal for a month, writing down every cent you spend. You can also check out websites like Mint.com and Learnvest.com, which have free, user-friendly tools to help you track your spending and budget realistically. Â Just make sure you have a little wiggle room. âLeave in some room for fun,â says Newman. âLife should be a balance.â
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Be cautious with credit
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Thanks to the economy, many college students are relying on credit cards more than ever, but a quick fix now can leave you saddled with thousands in debt for years after graduation. According to a study by Sallie Mae, 2008 college seniors graduated with an average of $4,100 in credit card debtâup from $2,900 four years ago.Â
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Newman advises erring on the side of caution when it comes to credit. If you have a fixed income or no income, you might want to stick to cash. But if you have the means, keeping a card for emergencies is a good idea as long as you realize that having nothing to wear for your first date with the cutie down the hall doesnât count as an emergency. If the convenience of a credit card is what youâre craving, a prepaid credit card or a debit card will give you the ease of plastic without letting you go into debt. Hereâs the bottom line: unless you know you can pay the bill each month, a credit card isnât worth it. âGood credit doesnât take long to build up; you can do that in about three months,â says Newman. âUnfortunately, itâs all too easy to miss bill payments and get bad credit, which takes a lot longer to get rid of.â
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If you do decide a credit card is the right decision, itâs also important to find the right one for you. There are a lot of options out there, so be sure to do your homework before you commit. Learnvest.com recommends keeping these three things at the top of your checklist: the lowest APR you can find (10% or less), a grace period of three weeks, and no annual fee. For more info, check out their credit card finder tool.
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Pay attention to the little things
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Picking up a bottle of water every day doesnât seem like a splurge, but it can easily cost you as much as $20 a week, so try carrying a refillable bottle with a built-in filter instead. And you may need that caffeine boost to keep you awake during your 9 a.m. lecture, but switching out your daily caramel macchiato for home-brewed coffee will make a big difference to your bank account. âLittle things like that can really add up,â says Newman.
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Smart college girls are always looking for ways to save a few bucks. âWhen I go out to eat, I always order water,â says Megan Leong, a senior at UNC-Chapel Hill. âIf you drink soda, drink it at homeâitâs cheaper.â Carlene Helble, a senior at James Madison University, saves money by buying in-season produce. âThe store usually has a sale on it and it tastes way better than out of season offerings,â she says. âI also stalk the Internet for coupon codes for online shopping. I usually score free shipping!â
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Textbooks are always a big expense, but you can cut back by shopping around online, buying used as much as possible, or buying them as you need them instead of all at once at the beginning of the semester. Once you realize how much money you can save with little lifestyle changes like these (and what else you can spend that money on), youâll never go back. For more tips on how to save money at school, check out this article.
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Itâs never too early to save
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When youâre living off student loans and Ramen noodles, saving money for the future is the last thing on your mind. And sometimes, thatâs okay. Saving in college isnât always practical. If youâre trying to get out of debt, Newman says, that should take priority. But even then, itâs best to be prepared for the unexpected. âAs a rule of thumb, you should have an emergency fund with three months worth of money for you to live onâjust in case something unexpected happens,â she says.
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If you do have an income, itâs never too early to get in the habit of saving. If you bank online, you can set up an account that will automatically transfer money into your savings every week, so you donât even have to think about it. âSaving money is a great habit,â says Newman. âEven if you only save $5 a week, thatâs still better than nothing.â
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Sources:
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Megan Leong, senior at UNC-Chapel Hill
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Carlene Helble, senior at James Madison University
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Cara Newman of Learnvest.com
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Learnvest.com
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Mint.com
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Sallie Mae study
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