As you venture out into the world as a college freshman, you now have a lot more freedom and also more responsibility. The financial decisions you make now can determine whether you live comfortably or not. Having some guidelines can help cut down unnecessary spending and even gain more money in the process.
Here are some tips for you to consider as you begin making your own financial decisions:
1. Save for an Emergency Fund– Always have extra finances set aside in case you encounter a sudden emergency. It helps you avoid debt and can save you from a sudden financial restriction. A good rule of thumb is to save around 10% of the money you get.
One easy way to do this is to have another bank account where you store the emergency funds. That way, you’ll start working with what you have in your main account.
2. Take Care of Your Credit – Being in college will likely be the first time you handle a credit card. Even if you manage to get a card with a high limit, you should never maximize your limit. A good rule here is to keep your credit at around 30%. If you end up owing too much, you could incur high-interest rates that can send you into a debt problem.
Another strategy you could follow is to only use the card if you have money to pay for the purchase. Store that money away for when the payment is due. That way, you don’t overspend and can work towards building a good credit score. Having a high score can help you land better cards and deals in the future.
3. Start Investing – Being in the early years of adulthood, you have the freedom to experiment with your investments. Starting this early can also make a difference when it comes to your future income. You can opt to go for high-risk, high-reward investments like cryptocurrencies. You can also begin working on an IRA or stocks.
Whatever your decision, you are making your money work for you. Money working for you is better than money sitting around in your house. Even putting it in a bank or credit union is a good option.
4. Budget Your Food Expenses – Food can take up most of your budget if you’re not careful. From fast food to splurging on snacks, this can empty your wallet fast. By setting a budget for your food, you’ll always think about ways to make the most out of it. You begin looking for cheaper yet more filling options.
Another way to approach this is to plan your groceries ahead of time. By knowing exactly what you’re going to buy, you can control the amount you spend on food. Even a bit of research online can give you access to cheap yet satisfying meals.
Don’t Fear Mistakes
Part of learning how to be better with money is making a few mistakes along the way. Don’t put yourself down if you made a mistake with the money you spent or put it in the wrong investment. You are still a college freshman, and in the phase of your life where you can recover from any financial mistakes. As long as you keep improving and developing good habits, you’ll always be fine.