photo credit: spakattacks

College will be starting back in a few weeks for many returning students and it will also be a new chapter in life for the freshman class of 2012. What an amazing time for many students who will be leaving home for the first time and and have many great memories and friendships to build over the next 4 years.

College life is not only about building friends and studying hard, but also about building the framework for your financial future. Hopefully you already had some financial education from your parents, grandparents or a close family friend. If not, I guess it’s time to roll up your sleeves and get to work. It’s not too late and this can also be informative. You will be better prepared to make solid financial decision and create your own financial future.  This might be the first time away from home and your first experience with creating your own budget.  This is an incredible opportunity to map your financial future for the next 4 years.

5 Money Tips I Wish I Knew Before Starting College

1. Have Fun! Bet you didn’t think number 1 would be this easy.  Well, I wish I had more fun in college and I think you should relax and take time to smell the roses.  If you’re a new freshman for 2008, be sure to meet as many new friends as possible.  The first few days of school will be intense, but remember to relax and be social.  These new friends you’re meeting will not only impact your next few months and years at college, but possibly your finances and career too.  You are establishing your new career network, have fun!  College life will also allow you to meet many people that are in the very same economic position you are in now.  If you entered college rich, lucky you!  If you entered college through financial aid grants, congratulations you are among the masses.  This is your opportunity to help friends make solid financial decisions that will impact the rest of their lives.

2. Review your checking or savings account. If you live in California but will be attending Texas A&M, be sure that you research on campus banking options.  If you have a checking account with Wells Fargo, do they have a local branch at A&M?  If not, will you incur any fees for using a bank other than Wells Fargo?  If so, you might want to open another account at an bank in Texas or look into an online bank.  Many online banks will allow you to use debit cards without a fee at other atm’s, but you should review all policies before entering school.  When I started my freshman year I had an account and incurred over $60 my first semester in penalties.  This was very frustrating as it was my first lesson in bank fees.  Make sure you read all disclosure policies on atm’s, transfers, minimum deposit, and various fees.  Another fee that hit me was the minimum balance fee.  I was ignorant to the fact that just because I had money in the bank, the bank didn’t see it the same way.  Why?  Well, my bank’s policy was that my minimum for a savings account needed to be $500.  I would transfer money from my savings to my checking account, and not think twice about it.  The charge was $20!  You will save yourself many phone calls and money, if you review your bank’s policies first.

3.  Create a money plan or budget. How much money will you need in college?  $2,000 or $40,000 a year?  If you are entering med school or law school, this number could be significantly higher and even more reason to creat a budget.  You need a money plan or budget established before you start school.  Why?  Let me tell you about a guy I worked with a few years ago.  Mike had a law degree and was a new stock broker, who hoped to make his millions quickly.  Well, he soon found out that cold calling and sales was not a good match for his personality.  He discussed his financial outlook with me one day and asked if he should file for bankruptcy.  I looked at him puzzled as he was not even 30 years old.  His student loans hadn’t been paid in years and he owed over $150,000 is debt.  Wow!  I was speechless.  It happens all the time and you need an action plan.

If your basic needs like housing, tuition and a meal plan are covered through financial aid, you’ll still need a college budget.  Many pizzas will be ordered while studying late, as well as books and supplies.  Will you need $200 a semester or $2,000?   If you don’t know, call your new college and ask to speak with a housing resident adviser (RA) or another student who could assist with prices.  Ask what the washer and dryer cost for a load of clothes and don’t forget parking fee’s.  Also, be sure to review your student handbook for answers too. If you drive a car, what will parking cost you?  How about parking tickets?  Many colleges have on campus police rules and fee’s that may be different than your local jurisdiction.

4.  College books:  New or Used? I have to admit that I enjoyed having new books my first semester at college but then learned a wonderful lesson of a monopoly.  Our college store was the only source for books as we didn’t have Half.com or the dozen other resources available to students now.  Our bookstore would buy back our books for pennies on the dollar and had a tremendous markup on new books.  A little price research will save you hundreds of dollars.  Call your college bookstore and get a price list of the books needed for the upcoming semester.  Make sure the list includes used and new book prices.  Now spend a few minutes and you will see the savings opportunity immediately.  Many college textbooks cost over $50 and you might have the opportunity to buy them at 50% or less.  This savings will allow you to buy those late night Domino’s Pizza’s, Mountain Dew and Rockstars.

5.  College jobs? If you are able to attend school without working, consider yourself very fortunate.  My wife and I both worked through college and I think this allowed us to learn about the value of money early in our lives.  What do I mean?  Literally, I learned that if I sat in front of a computer and checked financial aid spreadsheets for new and returning students, I would earn $8 an hour.  My time and skill set was worth a certain price.  Only $8 an hour at the time, but still had a value.  This allowed me to earn a few hundred dollars a week and provide spending money for books, meals, laundry, supplies, and even the occasional pizza break.  You may also might be able to find a job that allows you to study.  Can you work at the library at night?  If it’s slow and you have approval, you might be able to read and do homework.  Look for jobs on campus first as you might have the opportunity to save time and money with commuting expenses.  Call around a find that job before school starts and your dream job is taken.  Be sure to call your college bookstore, student union, library, gym, pool, coffee cart, and cafe to see if they have any jobs this semester.

Have you planned your cash flow for your next 4 years at college? If not, now is the time to do it.  Just grab a piece of paper and make a giant “T” on it.  This is very basic, but will help get you started.  If you have access to Google spreadsheets or Excel you can create a pretty chart to show your new friends.  On the left side of the “T” write your income or savings for the quarter/semester.  Be sure to divide your savings account by the amount of quarters/semesters left until you graduate.  If you are entering as a freshman, you’ll have 8 semesters left to graduate.  This will give you a snapshot of how much savings you need to allocate over the next 4 years.  On the right side, write down your expenses.  Remember to do your research and review your student handbook for information about known expenses like tuition, housing, insurance, and meals.  Also call your college and ask an RA or student representative about other expenses like laundry, pizza delivery, and parking fines.  After you complete your money plan or budget, you’ll have a picture of how much money you need this semester and for the remaining 4 years at college.  Also, be sure to practice tip #1 and Have Fun!

Some additional Money ideas for college:

1.  Open an ING Orange account and earn 3.0% interest on your money.  It’s easy and free and might beat your current bank rate.
2.  Used book resources:  half.com, ebay, Amazon, and Textbooks.com.
3. Federal Student Aid budget worksheet
4. Citibank college expense worksheet

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