College students need to keep expenses down while saving money.
The key to financial prosperity is saving money early in life, which gives your money time to work for you. College students have the opportunity to cut unnecessary expenses, avoid incurring debt and interest payments, and take advantage of scholarships and grants.
Use the Time Value of Money to Your Advantage
Compound interest will help you build wealth over time. If you invest only $50 per month and earn 8 percent annually, your savings will grow to $74,518 in 30 years. Every dollar counts, so don't be discouraged if you can only invest small amounts each month. Tracking where money is being spent is fundamental and is a lesson best learned early in life.
Start Saving Early
The most important factor in taking advantage of compound interest is giving your money time to grow. It's imperative that you start saving as early as possible so the interest you have earned can accumulate. Have your employer direct-deposit money from your paycheck into a savings account each month to automate the process.
Track Your Spending
Know where your money is going to maintain control of your finances. Create a budget and track your expenses with any tool that works for you. Whether you use a pen and paper or financial software, you'll avoid paying overdraft fees by knowing your financial picture.
Take Advantage of Financial Aid
Invest time looking for scholarships and grants, as this money will not be a debt for you to repay. This money is available for students regardless of which year of college you are in. Consult your school's financial aid office for guidance, and search the Internet for potential programs. You also can reapply for aid that you were denied in previous years. Finally, be sure to pay attention to deadlines and get all applications submitted in time.
Avoid Excessive Credit Card Usage
Only use credit cards for emergencies, since the interest paid is an unnecessary expense. The annual interest rate on credit card purchases is often higher than 20 percent, so always pay your balance in full every month. Avoid credit cards with high interest rates, especially store-branded offerings. "If credit card debt in general is bad, store cards are the absolute worst debt that you could have," said Mellody Hobson of "Good Morning America."
Eliminate Unnecessary Expenses
Consider leaving your car at home. Many universities have excellent public transportation in place, making your car, gas and insurance unnecessary expenses. You also can avoid potential parking fines and speeding tickets by not driving.
Look for Discounts and Clip Coupons
The low cost of a newspaper will be repaid in the form of grocery savings through coupons. You also can find coupons online by visiting manufacturers' websites.
Treat Eating Out as a Luxury
Eat at home whenever possible, and treat eating out as a luxury. Consider preparing food in large quantities and freezing portions for quick meals later in the week.
Buy Used When Possible
The cost of new textbooks often can be as much as the tuition for the course. Avoid this hefty expense by purchasing your books used. Shop online for a gently used copy of each book and resell your books at the end of each term to recoup some of the cost.
Save on Health Insurance
Compare your options for health insurance. You may be able to obtain coverage on your parents' policy. If you have to purchase insurance, check with your university to see if discounts are available. Otherwise, many employers offer insurance to part-time employees. For example, Starbucks only requires employees to work 20 hours a week in order to receive medical and dental coverage.
Tags: your money, credit card, credit cards, each month, early life
