Whether enrolled in your first year of college, or on your way to college next fall, there is a lot of planning to be done.
Every semester, you have to choose a class schedule, budget for food, books, and extras, and perhaps obtain a part-time job.
At the top of your list should be something you may not have thought about yet: creating a financial plan.
Heading into college is a great time to get a jump-start on creating and understanding your financial situation. But with so much information available, it can be overwhelming.
Start with the basics, so you can develop good habits early:
• Open a checking account at a bank close to campus, especially if you plan on taking cash from an ATM regularly. If you withdraw cash from another bank’s ATM, you will most likely incur a small fee, around $2 to $3.
• Open a savings account. Build up a cash buffer that you can tap into if you have any big expenses coming up, such as a formal or a trip to see friends. Get in the habit of saving a set amount every month.
• Once you build up a cash buffer, start putting money into an investment account. The earlier you start, the more advantageous it is for your future.
• Create a budget to manage your income and expenses. Fixed expenses include rent, phone bill, utilities, etc. Whatever is left over is what can be spent at your discretion.
• Open a credit card to build credit. Do not get carried away with promotions and open multiple cards. Start small with a few expenses, such as gas and groceries. Pay the complete balance every month, because if you only pay the minimum, you will be charged interest on the amount unpaid.
• Check your credit score once a year. Your credit score will be checked later on when renting an apartment and buying a car.
• Once you turn 18, sign basic estate documents, especially an advanced healthcare directive. This will allow your parents to be informed of your medical condition in case something happens.
Financial independence is the result of establishing financial goals early in life, consistently saving and investing, avoiding credit card debt, and planning for a happy retirement one day.
Connor Thomas is a certified financial planner with Quest Capital Management Inc. in University Park.