4 Important Personal Finance Tips for College Students
Your college years are a very difficult time to manage your money. Young adults need to learn and understand the basic fundamentals of personal finance. Frank understands the importance of financial literacy, especially for students and adults in their twenties. Good money habits will prepare them for the future and are beneficial for them in the long run.
1. Monitor your cash flow and track your spending.
It is important to remember that you need to be bringing in more money than you are spending. Record every purchase for a few months so you can understand where you spend the money and where you can cut back. There are many useful apps or create your own spreadsheet on your computer, phone, or in a notebook.
2. Start a rainy day emergency fund.
There is always the possibility of something happening that you are not prepared for, like loss of a job or injury requiring a hospital visit. An emergency fund will help prevent you from going into a lot of debt and you won’t live paycheck to paycheck. Experts suggest to have at least one month’s living expenses put away, but three to six months would be ideal.
3. Pay off your debt.
Create a plan to get out of the red by paying off the highest interest rate debt first or pay off the debt that has the smallest balance first. By making this a priority, you will pay less over the life of your loans. The less debt you have, the more motivated you will be to get yourself out of debt entirely.
4. Set savings goals for future purchases.
Your future will come with big purchases, such as a car, graduate school, or starting a family. Make a plan to set aside a certain amount of money each week or month and the amount of time you need to save. It is important to have savings goals so that you are prepared when the time comes, and don’t let yourself take money out of that account unless it is an emergency.