10 Money Lessons for College Kids

A New Beginning

Heading off to college means more than starting new classes and making friends in a new environment. It often means new responsibilities and a growing need for good money management. Here are the top 10 you’ll want to work on while making the most of your college years. Photo Credit: Jacob Enos


1. Opening Your First Bank Account

If you’re just now opening your first bank account, you can visit a branch or sign up online. Visiting a branch may be best if you want to speak with someone directly about what your account offers, how to use an ATM and what you need when you visit a branch for a deposit or withdrawal. If you want to sign up online, you’ll need to have certain personal information in front of you: your Social Security number, home address, e-mail address and a debit card or bank account number from a parent in order to transfer money from an existing account to a new one, says Bank of America (Stock Quote: BAC). Some banks have account options specifically geared toward students. Chase (Stock Quote: JPM), for instance, offers college kids an account with no monthly fees, e-mail alerts and online banking and bill paying. Photo Credit: Betsssssy


2. Working During College

More than half of undergraduate students have paying jobs, according to the Brown Daily Herald. And working about 20 hours per week may be a good idea for students on a budget to help afford clothes, shoes, food and other basic necessities while building social and leadership skills, but working a 40-hour week in additional to going to school full time could have a negative impact on your grades, notes New Mexico State University. Either way, having a job will help you become more disciplined about your time management. And since you’ll be so busy when payday rolls around, you’ll want to opt for direct deposit to save you time and cash. With the service, your pay will be deposited electronically into your bank account instead of being issued to you on a paper check. Direct deposit also can save you money, since you’d have to pay a fee to get our money at a check-cashing store. Photo Credit: adactio


3. Filling Out the W-4

Chances are, if you’re starting a new job while you’re in college, you’ll need to fill out a tax form called the W-4. What you write on this form determines how much Uncle Sam takes out of each check, so accuracy matters.If you’re financially independent, meaning you don’t get financial help from your family, you can claim yourself as a personal allowance, meaning you’ll enter a “1” in line A of the W-4. If you have a parent or guardian who claims you as a dependent, you won’t claim anyone and enter a “0” in line A.If you expect your income to be $950 or less in a given calendar year, including $300 in “unearned income” like earnings from a savings account or dividends for stocks purchased in your name, you don’t have to pay taxes, but you still need to file a W-4. For more details and instructions, see the form. Photo Credit: Robert S. Donovan


4. Filing Your Tax Return

Filing a tax return every year may seem like a mundane task that even your parents dread. But it could mean getting money back from the government, and you don’t want to miss out on money that’s rightfully yours. Many unmarried students with no dependents can simply file the IRS Form 1040 EZ. To make sure you fill out the form that’s right for you, irs.gov has a tool to help you decide. Photo Credit: Genbug


5. Filling out the FAFSA

If you’re heading off to college just this fall and you’re receiving financial aid http://www.mainstreet.com/article/moneyinvesting/education-planning/student-loans-how-much-too-much, you’ve likely already filled out a Free Application for Federal Student Aid or had one filled out on your behalf. You’ll have to fill out this form each year you’re in college because your financial situation can change and qualify you for more or less in federal student aid, according to fafsaonline.com. You may also need to fill one out for federal education grants and to determine your eligibility for a work-study program. In order to fill out the form, you’ll need certain personal and financial information including your Social Security number and federal income tax information for you or your parents. Photo Credit: fafsa.ed.gov


6. Budgeting Tools

Especially if you’re living in a house or apartment as opposed to a dorm room, you may have a lot of new bills to take care of on your own, and budgeting tools like Mint.com can help you keep track of your finances. The site categorizes your expenditures and deposits to show you how much you spend on food, rent and utility bills for instance, and you can tweak your settings if the automatic classifications aren’t quite right. Personal finance experts from Credit.com suggest checking your accounts every day, and Mint.com offers easy-to-understand pie charts and tools to set budgets for specific categories. It will also be a big help when balancing your checkbook, a task some bank customers too often ignore. If you regularly look over old account transactions, you may catch instances when you’ve been overcharged, for example. And seeing a pie chart that says you’ve spent 60% of your budget on traveling and shenanigans during Spring Break might convince you to set your finances straight as well. Photo Credit: Mint.com


7. Getting a Credit Card

This fall, it’ll be harder to fall prey to credit card peddlers offering freebies on campus. That’s because they’ve been banned from luring college kids into debt on school grounds. You may find credit card company reps just off campus however, so beware. That free T-shirt, mug or teddy bear could just be the beginning of a world of financial hurt. Among the other new measures preventing kids from spending more than they can afford, parents are now required to co-sign on credit cards for kids younger than 21 if applicants can’t show proof of sufficient income, a figure that varies depending on the bank. For instance, you might need pay stubs to prove that you make about $2,000 a year, according to Smart Money. Secured cards are also an option for those who are just starting to build credit. With these cards, you secure the credit limit you want by paying it upfront. However, you’ll have to pay back that amount, or a minimum payment amount, each month. Photo Credit: The Consumerist


8. Managing Your Credit

If you do have a credit card while you’re in college, the temptation to shop or go out to restaurants and bars can make it all too easy to let your debt get out of control, so be sure to manage your credit responsibly and pay off your balance every month if at all possible. If you carry a balance on a credit card, you may end up having to pay excessive finance charges, which, over the course of months, will be tacked onto your credit card balance, making it difficult to rein in your debt. On average, graduating seniors have racked up more than $4,100 in debt, according to CreditCards.com. Photo Credit: xJasonRogersX


9. Protecting Personal Information

If you’re just heading off to college, you’re probably looking forward to making lots of new friends. But don’t trust just anyone with your personal information. “Beware of ‘frenemies’ … who want to steal your identity,” warns Credit.com spokesman Tony Berlin. If you accidentally lose a credit card, put too much personal information on your Facebook page or don’t dispose of bank statements properly, you may find yourself with several extra credit card accounts, possibly with hefty balances, in your name. And if you’re using public computers like those in a computer lab, be sure to delete your browser history, especially if you’ve logged into bank accounts online. Photo Credit: CarbonNYC


10. Understanding Fees

Due to financial reform, checking account holders will have to opt in to receive overdraft protection, a service that pays for transactions that take you below your bank balance. The fees for this service often range around $35 and if you already have a bank account, you’ll have to make the decision to opt in by Aug. 15. That means you have to specifically request the service, which one might choose in order to avoid the embarrassment of a debit card transaction being declined. However, managing your money responsibly, avoiding overspending and making sure your balance doesn’t get too close to zero can prevent that embarrassment, and the hefty fees, as well. Photo Credit: Dan4th


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