College is the prime time to start learning how to manage your money. Personal Money Management is a skill which you can learn and will pay off for the rest of your life. Money management mistakes made anytime,especially in your college days, can create you financial distress in the long term. We have found there are 4 habits which you need to create to help you build great money management habits, as well as help you avoid the most common pitfalls students often face.
Habit #1 ==> Credit Card Debt – Do not get sucked into depending on credit cards ever.
When you start using credit cards, you build up debt. If you’re in college and you’ve never experienced the painful burden of debt, it’s very easy to
underestimate how quickly debt can build up.
One of the most important money management habits you can develop is to earn money, save it up for that special purchase. Not everyone does this but you need to be above the average and make your money first, then use real cash to make purchases. A credit card is a good tool to use for a short term purchase not long-term.
Habit #2 ==> Start Building Your Credit
Ok I see that this may be a bit contrary to the above point but here is the thing, if you can control yourself impulses a credit card is a good tool to use for short-term purchases not long-term comittments. By using the card in this way you only purchase things which you can have paid off in no more than 3 months. It shows a good credit track record and helps you build up your credit within a few years.
Another point to be made is do not use credit cards to buy things you normally wouldn’t be able to afford. Instead, buy small items on your card every month and pay it off right away. This is a really awesome habit to build on as you will rarely accrue interest charges and you will be building credit by the time you leave college.
Habit #3 ==> Become a Client at a Financial Institution
In todays market place most banks and credit unions almost always offer low interest rates, comparable in their fee structures but where you will find a difference is in the service – even in todays marketplace some still haven’t figured out how to do this right so shop around and build a business relationship with the right place. Research your bank carefully – they’re a partner in your life. You’ll be using them to store your money, for credit cards and eventually down the line to buy your home.
Habit #4 ==> Track Your Income and Expenses
How much money are you making and how much money are you spending? If you asked this question of the typical college student, you’ll find that most of them won’t have a clear idea.
Knowing your number precisely will allow you to make financial decisions with much more confidence. It’ll allow you to prepare for your future, as well as make smart decisions in the present. This is a habit that’ll stick with you for life. The time to develop this habit is while you are in college.
You may feel there are more important habits and that could be true as everyone’s situation needs to be tailored to their needs and personalities. These 4 habits we have listed are good basics to start with and build on, as you create and improve your personal money management skills.