Five money management tips every college student should know

money_2377234Did you know the average college student graduates with nearly $25,000 in debt? But you don’t have to end up that way! Just start off with some sound money management practices:

1. Create a budget. Write down your regular sources of income, whether it’s a part-time job or help from your parents, and then jot down estimated expenses. By this time in the year you should have a good sense of the costs of school supplies, food, gas, and other expenses you face on a regular basis and be able to figure out what you can really afford.

2. Get a checking and savings account. Set up an account at a local bank to prevent bank fees for check cashing and withdrawals. Ask whether there are any discounts for students, and if there are monthly fees for having the account. Keep a record of purchases and check your balance regularly to avoid bouncing checks.

3. Be careful with credit cards. Many organizations are happy to give credit cards to college students, but be careful not to overextend yourself. It’s so easy to get in over your head with debt when you have a credit card in your hand. Avoid the temptation. Don’t think of a credit card as a free pass. If you can’t pay off the balance each month, reign in your purchases.

4. Submit a FAFSA every year. To apply for federal financial aid, you need to complete the Free Application for Federal Student Aid (FAFSA) every year. Even if you didn’t quality last year, try again this year. Even small changes in your family’s financial status can impact eligibility.

5. Learn about student loans. If you have to take out loans, be sure you understand exactly what you’re getting into. The terms of a loan can vary greatly and make a huge difference in how much debt you incur along the way. For example, direct loans are preferable to private loans because the interest rate is usually lower and is a fixed rate, so it won’t increase over time. These loan programs usually have more flexible repayment plans than private loans.