Congratulations: You’ve nearly graduated high school and are one step closer to attending college. That’s an accomplishment worth celebrating if there ever was one.
But beyond daydreaming about the newfound freedom you’ll have in a few months, consider making some of the following money moves. Doing so can help you keep track of your finances and avoid hiccups along the way.
Open a checking account
One of the first products you’ll want to sign up for is a checking account. That way, you’ll have a place to store any money you earn. Plus, even basic, free student checking accounts typically come with debit cards, meaning you won’t have to run around campus with wads of $20 bills.
Be advised, though, that overdraft fees can be a killer. These happen if you try to make a purchase — using a debit card — for which there isn’t enough cash in your account. Don’t fret if this happens once or twice, just try not to make it a habit.
Most financial institutions, like The First National Bank & Trust Company of Newtown, offer mobile banking, which can go a long way in avoiding unnecessary fees. Users can check their funds when they’re on the go. If they’re running low, put away that debit card until there’s more money to draw from.
Establish credit
Although you may not need a car at college — and certainly won’t be buying a home — establishing credit when you’re young will let you qualify for good rates on auto, home and other loans in a few years. A common way of doing that is to sign up for a secured credit card.
If you’re under 21, a parent may have to cosign on the application. If it’s approved, you may also be asked to pay a deposit, which is kept as collateral in case you don’t make your payments. That amount is typically equal to your credit limit. If you choose to close the account in a few years, you’ll receive that money back, assuming you’ve paid off your balance in full.
Some banks, however, including The First National Bank & Trust Company, offer student credit cards that don’t require a deposit.
Remember to use your new plastic responsibly. That means making only those purchases that you know you can afford and paying bills in full and on time. Try not to exceed 30% of the monthly limit.
Know your student loans inside and out
If you’re one of the millions of students who received some sort of financial aid package, be sure to keep track of your disbursement and repayment schedules. For federal loans, there are a number of useful websites that can help you decipher those tricky financial aid letters. Moreover, most schools have financial aid offices that can provide additional support.
The takeaway
As exciting as this next chapter will be, the first few months of college will also call for some major adjustments. That includes learning how to manage your personal finances by signing up for a checking account, using new debit and credit cards responsibly and maintaining a solid overview of your student loans. Do these three things and you’ll be off to a strong start.
Tony Armstrong, NerdWallet
