There are certain must-haves when you’re heading off to college. Most checklists for college students include things like dorm room necessities, study aids, books and similar supplies. But what about your finances?
Going to college opens up a whole new financial chapter in your life. Paying for school and all its related costs, while also managing your own living expenses for the first time, can be a challenge for new students. Many live on a quarterly budget, stretching their financial aid disbursements over the whole term, while some juggle income from multiple sources.
To help make your financial transition easier, we recommend adding the following items to your college survival kit:
1. A budget
If you’re going to make your financial aid disbursement last, you’ve got to have a budget. Otherwise, you risk spending too much in the first month and not having enough to buy essentials later. But building your budget doesn’t have to be complicated. Simply add up all of your expenses for the term and subtract the total from your income—that’s how much you have left for savings or spending.
One simple way to stick to your budget is to follow the 50-30-20 rule: Spend 50 percent of your income on essentials like food and housing, 30 percent on discretionary items like Netflix or back-to-school clothes, and put 20 percent into savings for your future goals.
2. Renters insurance
Take a look at your college packing list and note how many expensive items are on it. At minimum, you probably have a laptop, smartphone, expensive textbooks and possibly a bike—not to mention whatever furniture and clothes you bring. If something happens to your apartment or dorm room, like a fire or break-in, how will you replace your lost items?
Renters insurance is something college students often overlook but definitely should consider. If you’re living off campus, you likely won’t be covered under your parents’, landlord’s or roommate’s insurance policy. Even if you stay on campus, your parents’ homeowners insurance will only cover your possessions up to a certain amount—usually 10 percent of their total coverage. Getting your own renters insurance means you won’t have to replace your belongings out of pocket if they get damaged or stolen.
3. A savings plan
Going to college is all about laying the foundation for a thriving future, and saving money plays a big part. Even if you’re living on a shoestring budget, it’s a good idea to start saving as soon as you can. One simple way to save is to enroll in OCCU’s Change Jar program, which rounds up each debit card purchase and stashes the extra in your savings account. As you build up your savings, you’ll eventually want to consider moving some of it into a higher-yield savings account. Take a look at your five-year career plan, and develop a savings plan that will help support your long-term goals.
4. Student loans
Paying for college can be a challenge, and most students need some combination of student loans and grants to cover their tuition. When financial aid doesn’t get you all the way there, a private student loan can help fill the gap. If you’re about to start school and still haven’t figured out how to cover all your expenses, a private student loan might be your best option.
When you take out a student loan, pay attention to things like the interest rate, when interest starts accruing, when you have to start paying it back, and what deferment or repayment options are available. Look for a loan that has the lowest rates and fees and the friendliest repayment terms. Credit unions often offer the best deals for students. At OCCU, for example, we offer flexible repayment options and never charge origination or repayment fees for our private student loans.
Adding these four things to your college survival kit will help make your financial life much easier as you make the transition to adulthood.