There are several money lessons to learn before college. If you're preparing to leave home for the first time, you might be excited to embark on your future. You might be attending school with your closest friends or ready to exert your independence. But before heading off into the world by yourself, it's important that you know how to manage money. Here are seven money lessons to learn before college.
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1. How to Track Spending
Knowing how to budget is one of many important money lessons to learn before college. Whether you have a part-time job or receive an allowance from your parents, you'll need to stretch your pennies. As you'll soon discover, nothing in this world is cheap. Before leaving home, practice budgeting and create a spending plan. You could pay your own cell phone bill, transportation costs and entertainment costs. This not only teaches you how to be responsible with money, but you'll appreciate the value of a dollar.
2. The Importance of Reading the Fine Print
If you didn't have any financial accounts before college, you may not understand the importance of reading the fine print. This is crucial whether you're applying for a bank account or a credit card. The fine print of applications outline the terms of financial contracts. And if you ignore this section, you might agree to undesirable terms.
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3. How to Manage a Credit Card
Even if your parents won't allow you to get a credit card before the age of 18, it's important that you know how credit works. Have a discussion with your parents and ask questions about credit management. A credit card is an excellent way to build your credit history, but you can only build a good credit history if you use your account responsibly. You should understand the importance of paying your bill on time and paying off balances in full each month.
4. How to Manage a Job and School
Unless your family is blessed with very healthy finances your parents may require that you hold a part-time job in college. This can be challenging, especially since college will demand a lot of your time and energy. To prepare, get a part-time job while still in high school. You'll learn how to manage school work with employment, thus resulting in an easier transition once you get to a college campus.
5. The 10% Rule
It's tempting to blow all your extra cash and part time income on non-essentials. And as a young adult, you should have fun. But it’s also important to be responsible and save for the future. To develop a good savings habit early, always deposit 10% of your pay into a savings account.
6. Don’t Mix Money with Friendship
I certainly understand the desire to help a friend who needs financial help. Just know that friendship and money don't always mix. As a general rule, only lend money if you can afford to lose it. This way, your relationship won't suffer if your friend can't afford to repay the loan.
7. Buy Low Cost Items
Whether you're shopping for clothes or buying books for school, always look for a discount. If you keep your eyes peeled, getting the things you need for less is easier than you might think. Being frugal is an excellent way to stretch your budget and alleviate some of your financial worries.
Going to college is a wonderful learning experience. But not only should you receive knowledge to start your career, you should learn the best ways to manage your finances and build a solid financial foundation. What are other important lessons to learn before college?
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