Financial Literacy 101: tips for college freshmen


Paul Sisolak

Paul Sisolak

Blog author Paul Sisolak

As a personal finance journalist, Paul specializes in financial literacy, loans, credit scoring and the art of negotiation. He's covered some of the nation's most inspiring financial success stories for national publications including CNN, and US News & World Report and has a passion for helping Americans overcome their debt.

Published September 21, 2016|6 min read

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Campus life, Greek rushes, keg parties and football games, roommates, classes, late-night cramming and early-morning exams. For most college freshmen, they’re all the experiences you might expect beginning your first semester.

With all that (and more) on your collegiate plate, it’s easy to forget that it’s also the time to start getting serious about your finances. Living on campus, away from home for the first time, being financially responsible can seem as foreign a concept as anything in the classes you’re taking. And unfortunately, most colleges don’t have a 101 class in financial literacy.

Anything from racking up a large credit card bill to borrowing too much in student loans are mistakes that can cause some major college freshman stress (and make you go broke).

To make sure you get an A in Financial Literacy 101 this semester, start with these tips:

1. Talk with your parents

Now that you’re off to college and totally independent, asking your parents for advice may be the last thing you want to do. But don’t be afraid to ask mom or dad about any of these subjects yourself if you’re motivated to learn about personal finance. Try to arrange some time with them to chat about how to start saving money, learning about interest (earning it and owing it), and most of all, the basics of your student loans.

2. Budget, budget, budget

Keeping a monthly budget of what you earn and what you spend can help make you aware of where your money is going, since losing track of it can quickly leave you with no money left. A budget doesn’t have to be anything detailed or super involved. If you have a part-time job, list what you earn each week, and then budget for how much you’ll allow yourself to spend in a month. (Use an app!) Give yourself some allowance money for going to the movies or eating out with friends; with your budget, you’ll be able to work with those dollar amounts and experiment with cutting back on spending. Always budget for necessary items, like toiletries, school supplies or other items that arise by need. The best advice I can give you: Stick with your budget.

3. Apps are your best friends

If you know that a budget on paper is sure to get lost in the shuffle of class notes, take advantage of budgeting apps on your smartphone to manage and save your money. Our favorite is You Need A Budget (YNAB), since it automatically connects your bank accounts together to give you a full, rounded picture of your spending. Other apps like Mint, Level, BUDGT, and others make budgeting fun, organized and easy to understand if a spreadsheet is too unapproachable, intimidating or just feels like something you’d do in class.

4. Start building your credit

One way not to use a credit card is to go to the mall and buy everything in sight, thinking that it’s "free money." Since college is the first step to becoming a finance-conscious adult, take this time to learn about credit, not just credit cards. If you have no credit, it’s time to start establishing it. Try applying for a secured or student credit card. If you’re approved, you’ll need to make a cash deposit; this becomes your credit limit that you can borrow against. Keep your spending limit low – use it only for your Netflix subscription, cell phone bill or eating out once a week. Pay your monthly balance on the due date, in full (never partial), and over time, you’ll start building positive creditworthiness that will help you buy a car or house after graduation.

5. Buy used books

With the average cost of college books at about $1,200, we’d encourage you to buy used whenever possible. Remember that other students are thinking the same thing, so buy your books as early as possible before used copies get sold out. You can even email your professors before the start of the semester to get names of the required texts. Amazon and are also two resources to buy and sell used books. In my college days, I’d always ask my professors if I could purchase an older edition of the class text to save money. Updates to new editions are often so minor that they don’t justify the full cost charge by textbook publishers.

6. Beware of ID theft

Over 13.1 million people were victims of identity theft last year, and college students are no exception. On a college campus, you could have your personal information stolen anywhere from the dining hall to the library to your own dorm room, on your laptop. Don’t let friends or roommates borrow your credit card; in fact, never carry your cards to and from class unless you’re certain you’ll be buying something along the way. Protect your logins with strong passwords nobody will guess, and change them often. (The same goes for tablets and smartphones.) When using public WiFi, always log in to a secured network to protect your activity from ID thieves and scammers. And remember to completely log out when using a school lab computer – it’s likely that your Facebook status won’t be the only thing at risk if you don’t.

7. Remember your student loans

One of the most financially literate things you can do in college is to stay mindful of your student loans from day one. Find out what kinds of loans you have, and how much you or your parents have borrowed. Are they federal or private? Subsidized or unsubsidized? What are your interest rates? You might even consider starting to pay them off early before they’re due, even if it’s just the interest. There’s no rule when you can start, so if you’re an ambitious freshman, even a few dollars here and there counts. If you have questions, don’t hesitate to meet up with your student advisor or make a visit to the financial aid office on campus.

8. Take advantage of student discounts

When it comes to financial literacy, college is the one time where being a student gives you countless chances to get discounts and save money where other adults need to pay full price. Diners, restaurants, movie theaters, cafes, concert venues and other places often offer discounts when you bring a valid student ID. Keep your grades up and you may qualify for discounts on everything from insurance rates to airfare. Don’t ignore the perks and pluses on campus that come with being a student. Picking the right meal plan, for instance, can help save money if you live on campus. And if you’re a resident student who doesn’t commute, consider leaving your car at home to save money on gas, maintenance and insurance.

9. Save smartly

If you do nothing else with your money this semester (or the next four years), remember to save money. Like studying, you’ll want to save smarter, not harder. It’s already difficult enough to make ends meet as a poor college student, so how can you come up with enough to save? Use the power of interest to build on your deposits – open up a bank account that rewards dividends, like a certificate of deposit (CD) or high-yield savings account with a higher interest rate. If you’re working on campus or off, you might also have a portion of your pay automatically deposited into your savings, reducing the temptation to spend it.

Going to college, picking a major and getting your degree aren’t the only things you’ll need to prepare you for adulthood once you graduate. By putting some of these financial tips into practice, you’ll be ready for when it comes time to pay off your student loans, buy a house, budget for a family and other big financial responsibilities on the horizon.

Are there any financial tips that can help you ace Financial Literacy 101? Share them below.