Welcome to college! At the risk of sounding like one of your orientation coordinators, I’m going to tell you that the next four (or so) years of your life may well be the best years of your life. But you generally don’t get a crash course in finances during orientation (I sure didn’t), so I’m here to help.
There might be some instruction about money in your “First Year Enrichment” class (or whatever they call it at your school), but by the time they cover that topic, most of your classmates will have already made the three big freshman money mistakes. Ouch. Be cooler than your peers: avoid these mistakes!
Mistake #1: Buying textbooks from the school bookstore.
I’ve yet to meet a college freshman that shopped around for their textbooks. They all (including me, at that time) shuffle into the school bookstore like lemmings, and pay the premium that the school bookstore charges. Get your textbooks from Amazon, Chegg, or used from another student on campus, and you can easy save $150 (or more!) each term. You can find my super-secret, ultra-refined formula for saving money on textbooks in the College Freshman Checklist.
Mistake #2: Getting bank accounts and credit cards for free t-shirts.
Free stuff is awesome! But you’ve got to know, in the back of your mind, that there’s a reason that these guys are giving you a free t-shirt (or candy bar, or Frisbee). The reason they do it is because they will make way more money off of you over the years than the cost of that freebie. In most cases the money they make off of you is in the form of awful fees, which you could have avoided if you got a proper bank account.
So don’t be like your friends, who’ll line the pockets of banks and credit card companies in exchange for a cheep Frisbee with the bank’s logo on it! Get a checking account that is a truly fee-free student account, with ATMs on or near campus. This might be the type of account the guys with the free t-shirts are offering, or it might not be. Trust me, the money you save in fees will buy you much cooler shirts!
As for the credit card, I’m all for college students establishing a credit history by getting a credit card. However, the one being pitched on campus with a freebie probably isn’t the best one you could get. Get a proper credit card with no annual fee and spending rewards. (See College Money Tip #9: Establish Credit.)
Mistake #3: Ignoring student loans.
Chances are, you’ve taken out some student loans to help pay for school. You might be tempted to take this lightly, since it seems like everyone has student loans, and you’ve got a long time before you’ve got to start paying them back. But your best bet is to pay some attention to those bad boys, before they get out of hand.
You’d be amazed at how easy it is to take out more money than you should. Student loan companies are not likely to tell you if you’ve taken out more than you can reasonably pay back, and that includes the Federal government! I took out way more in loans than I could handle, and all of my loans are Federal student loans, so don’t think you’re safe just by avoiding private loans.
Keep track of your student loans starting now and you can save yourself a whole lot of hurt come graduation. And it will be ten times easier to track them if you do it from the beginning than if you try to start keeping records halfway through. Just put all of your loan paperwork in one file folder, and put a piece of paper in it where you add up all the money you’ve borrowed and keep a running total. And use this loan calculator to make sure you’re not going to borrow more than you can handle. That’s it!
Upperclassmen: could you chime in with some sage wisdom for the incoming class in the comments?