At the beginning of the year, did you set any goals or resolutions (achievable ones) regarding your finances? If you’re a high school or undergraduate student, it’s never too early to think about your financial situation and start planning smartly. It can be difficult to imagine 30 years down the road, but if you walk the thoughtful path with your finances now, you’ll be headed on a narrow track to retiring with less worry. Thinking about finances can correspond with some negative emotions: nervousness that a situation might turn out to be worse than you think, fear about possible future issues, or confusion when it comes to all the terms used in the complex world of banking and finance.
1. Make wise choices when selecting a bank
If college is in your future, it’s helpful to think about which bank would be most convenient to have a debit or credit card from. Personally, when I headed to college this fall, I switched from a local credit union to a more nationally recognized bank. Look for a bank close to the college you’d like to attend (or on campus!) if you plan on cashing checks often or just retrieving cash without ATM fees. Current Stanford freshman Mark Laurie uses Wells Fargo, for example. “I’m lucky it’s on campus,” he says, as many of his fellow students don’t have the luxury of a close-to-dorm bank. Checks often expire after 30–90 days, so it’s helpful to have your bank nearby—though online banking with mobile check deposit is also a good option.
2. Consider getting a credit card for college
Credit cards are almost inevitable, whether you want one or not. Many students (including high schoolers) have a debit card. While those can be used as both credit and debit, a debit card is not an actual credit card—the money is withdrawn from your checking account. A credit card allows you to borrow money and repay it at a later date. Building credit happens when a user of a credit card responsibly pays back the debt incurred (meaning that payments are made on time).
Starting this credit-building process in college can be incredibly beneficial, as you’ll be four years ahead of peers when it comes to credit history. That pays off in the long run: length of credit is factored into your credit score, and a good credit score definitely helps when making your first large purchases. “I got a credit card the day I turned 18,” Mark says. “[It helps so I can] build credit…to eventually take out a loan for necessary items such as a house or car if needed.” More immediately, many credit cards offer reward programs, with everything from free flights to cash back to game tickets for your favorite sports teams. Having a credit card is a big responsibility, so if you don’t think you’re ready for one, know that student loans also build credit. And when they defer while you’re in school, that counts as them being paid, so your credit score can be pretty high even if you don’t get a credit card in college—as long as you continue to make your payments on time post-grad.
3. Get a job
It doesn’t need to be glamorous: work experience, particularly for a few years, looks good on your résumé. The time spent at work can also be used to develop soft skills such as leadership, empathy, and timeliness. And it provides valuable income that can be saved for the incredible expense of college. “I got a job after I graduated to save money for textbooks and miscellaneous expenses in college,” says Mark. It’s proved useful for him so far: he has some money saved up to spend on the occasional Chick-Fil-A run with his roommate. If possible, working (even lightly) during the school year can be helpful as well. It certainly doesn’t need to be full time either. A job for 10 hours a week making minimum wage can earn you almost $4,000 a year (before taxes, based on the national minimum wage; some states may pay more or less). Some jobs pay more than minimum wage with raises factored in too—another benefit to working longer than just a summer.
4. Think about the impact of your purchases
Expensive textbooks, tuition, dorm supplies, coffee: essential purchases can’t be avoided, but not all of these purchases are beneficial for the future. An extra $5 every day getting coffee, going out for a meal, or buying snacks adds up to nearly $2,000 you could save in a year. “I feel like my finances are organized enough and that everything is under control, but I will worry once I’ve graduate and if I go to med school,” Mark says. For now, he’s been working to save money for eventualities too. It’s incredibly important to take time for yourself, and the popularity of “treat yo’ self” is a key example. But treating yourself doesn’t have to mean spending money every day. There are a lot of ways to be kind to yourself while spending nothing.
5. Don’t (always) buy textbooks
Often, it can be prudent to wait to see if you’re going to need a textbook for a class. Reading class reviews can be helpful to determine if the textbook is necessary, but talking with students who currently take the class can be the most fool-proof method to do so. It’s much easier to buy the textbook a few weeks into the quarter than realize you spent a few hundred dollars for nothing. Consider renting the textbook if your college offers that option as well (just don’t forget to return these books before the end of the semester or quarter). Mark has found renting textbooks to be much less expensive at Stanford than buying them. Books often rent for less than half the cover price. If you have to buy the textbook, see if the school’s bookstore will buy it back from you at the end of the semester, or think about renting/selling the book to a friend or underclassman who will be taking the class in the future. It won’t make you a profit, but it’ll give you some return on your investment.
6. Use an app to help with finances
Many colleges offer financial planning services or help to current students: for example, Stanford offers a personalized version of the app “Haven Money” to current students and employees to help track their finances. The various areas to think about when planning finances and evaluating an app for organization include anything from investing to insurance to banking as well as pay/income, credit and history, and school/other debt, if applicable. Budgeting is incredibly important for all these aspects, so an app for that can be welcome too. Additionally, most banks offer personal apps for their customers. This can ease in uploading documents and depositing money for students who don’t have a bank nearby or just prefer the convenience of staying in their dorm or on campus. NerdWallet, Forbes, and The Verge all have great lists of banking and budgeting apps, many designed specifically for high school and college students.
Developing these smart financial skills as early as you can will help you for an easier financial future. No one likes worrying about money, and while not everything is in your control, you can take advantage of the things that are. Your financial literacy will have a great impact on your life now and beyond!