You’ve heard of the freshman 15, but extra weight isn’t the only danger lurking in the shadows of college campuses.
Nobody talks about the freshman $1,500.
Just as college freshmen’s dramatic lifestyle change can tack on some weight, it can also tack on some debt.
In last week’s post the Back to School Financial Survival Guide, I wrote about some financial pitfalls facing all college students.
But the probability of making a financial mistake is highest your freshman year, and it can set the stage for the next three to ten years of your financial wellness.
Even if you’re fortunate enough to have your parents, relatives, or a scholarship covering your college tuition, college brings new expenses that might include books, meals, transportation; and new temptations like pizza, beer, and gadgetry and decorations for your dorm.
What’s worse, if you use a credit card to pay for any of these freshman expenses, the debt may be with you, at least, for the next four years. At a 16.9% annual percentage rate (average for student credit cards), making minimum payments, $1,500 of debt your first semester will cost almost $1,000 in interest in just four years.
So how do you avoid the freshman financial trap?
Hopefully you arrived at college with some savings, even if it’s just a few hundred dollars.
Later in life savings will be something you don’t touch except in emergencies or to perhaps buy a home. For college, savings is the money you have to live off of each semester. Hopefully this fund is refueled each year with a summer job.
Resist every temptation to blow that money in the first couple weeks of school, when the urge is greatest to outfit yourself and your room or splurge on nights out with friends.
Whether or not you feel you “need it”, find a part-time job! Unless necessary to pay tuition or housing, don’t kill yourself working while going to school, but work a few hours a week at something that’s not too mentally taxing.
When you get paid, don’t look at it as spending money. In fact, don’t even put the money into your checking account. Put it into savings.
If you’re smart, you’ll have a weekly or monthly budget for each semester that will allow you to draw on your savings for all of your expenses and still have some left over for emergencies.
I realize it’s more difficult than it sounds, but the rewards for being disciplined with money as a college students are greater than I can even begin to describe.
If I had known the importance of this advice when I was a college freshman, I would be more than $15,000 richer today.