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The Lake News Online
  • 6 Money Lessons You Should Have Learned Before College

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  • Business Insider
    In a matter of weeks, the class of 2018 will be loading up their person-sized duffels and under-bed storage boxes to head off to college.
    Many will take the opportunity to jump on planes, trains, and automobiles to start taking control of their own lives far away, from bedtime to homework to … money.
    Are these new college students going to be responsible with money? Or are they going to leave school four years later with a mountain of debt, a pile of obligations, and no idea how to accommodate either?
    In the hopes of skewing them toward the former, read on for six pieces of financial wisdom that every college student should know by move-in day. 1. Keep track of your spending.
    According to Anthony Humpage, CEO of financial education company Rich Dad Education, this is a critical lesson for adults as well as students. "In my experience, when you sit down and ask someone where their money goes, most people can't account for about 40% of their money. People typically spend a lot more than they think they do."
    The problem with this lack of awareness is obvious: If you don't know what you're spending, you don't know what you have left, and what you can and can't afford. College students glued to their smartphones have no excuse to plead ignorance, as free apps like LearnVest and Mint automatically track your spending and keep that info accessible only a few taps away. 2. Don't seize every deal that comes your way.
    "Money is more available for young people today than it was for their parents," says Humpage. "But it's available with strings. Very long strings." The internet is overstuffed with stories of signing up for a credit card "just to get the T-shirt" and ending up $10,000 in consumer debt, or piecing together a pile of student loans only to realize five years later that repaying them will take another 30 years.
    It doesn't even have to be that drastic: If you open a checking account that waives fees when you keep a minimum balance, but you can't manage to keep it, then there's another fee you owe every month.
    If you can't see the strings on a financial offer, you should take a closer look. 3. Read the student loan fine print.
    Humpage laments the rise of enormous student debt. At their core, student loans are a means to make higher education accessible to more people — a noble cause. But in their execution, they tend to leave something to be desired. "If I ever wanted to be reminded that the road to hell is paved with good intentions," Humpage says, "that's as good an example as I've ever come across."
    Page 2 of 3 - Before stepping foot on campus, students should know the terms of any student loans they may carry. Are the loans public or private? When will they start repaying? How much will they need to pay per month? How long will the loans take to pay off? Should they consider consolidating? Along with preparing students for a major monthly bill, awareness of how much they're on the hook for might very well affect how they choose to spend their time while in school. 4. Get a job.
    When asked what parents can do to help their kids prepare to manage their own money, Humpage has a simple answer: "Tell their kids to get a job." While he recognizes that not every parent wants their child's focus diverted from studying, he says a job even before heading to college is similarly valuable. "Maybe a year before college, have some sort of job or earning," he advises. "Get them used to managing a little bit of their money, so at least they're not thrown right into the deep end." 5. Don't get a credit card unless you can pay the bills.
    Humpage admits he's a little torn on whether college students should use credit cards. "On the one hand, I'd always advise someone to use a credit card over a debit because you're protected against fraudulent use, and you can even have things like cash back to build up a little bit of money," he says. "But if people don't keep track of their spending and have some sort of discipline, it can be a problem. People need to understand just how costly that debt is — it's the most expensive debt you can take."
    He suggests that for students (or their parents) who worry about being able to manage a credit card effectively, a prepaid card might be a good option. That way, a student gets used to using a card without the danger of getting into consumer debt. 6. Keep your debts to a minimum.
    Humpage calls this "leverage." "Keep as low a leverage in life as you can," he says. "Keep the number of fixed payments you have to make as low as you can against your income. That at least insulates you a little against unforeseen eventualities."
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