Although college age students should begin thinking about learning to manage debt, save for a home and look to establish credit few really do so while in college. Good financial management is not only good because it is the right thing to do but also because it will give you the freedom to go after the things that you need in life. Below are three money management secrets that you can use to be on your way to good financial management.
Start Building Credit Early
Some college students instead of moving back home with parents after college would like to purchase a home and have financial freedom early in life. Even if you don’t plan to rush into a huge commitment of a mortgage establishing a credit history before you graduate will help you to do simple things like get a credit card with good rates, rent a home and even get the job of your dreams. You can begin building credit by applying for entry level college student credit cards such as a student credit card or a gas credit card and begin using them and making your payments on time.
When you do this your credit file will have a good amount of activity which will make it easy to get a car loan or some other loan after you graduate. The Credit CARD Act of 2009 makes it harder now for students who are under 21 to get a credit card but they can still use creative ways to start building credit. For instance providing proof of an income that is sufficient to cover payments or having a parent or friend co-sign on the account are both ways of getting around the new laws.
Student loans can also help to improve your credit file as long as you make your payments on time.
Use The Credit Card To Pay For Purchases
Use the credit card to fund all your purchases as long as the credit card limit allows it. The catch here is that you must repay the balance (or at least try to pay off most of it) when you get the statement. A good money management tip is to purchase only the things that you can afford.
This strategy will pay off because the consistent record of payments will look good on the credit report and by the time that you graduate you will qualify for premium cards with great rewards and low interest rates. Using your credit card to pay for all your purchases is a good thing but only if you are disciplined enough to repay the balance in full. It is not a good idea to live off your credit especially so early in life.
The best part about using the card to pay for all your purchases is that some cards have built in reward programs and by using the card you get the added bonus of points that you can use to get some extras that you might need.
Use Wisdom When Applying For Credit Cards
The young, not fully understanding the risks to their credit will make the mistake of applying for credit cards every chance they get. Applying for and having too many credit cards in your name will lower your credit rating since it shows that you are more or a credit risk. Even if you never use the cards the fact that you have so many lines of credit open can pose a problem if you want to apply for a loan or mortgage.
Having a couple of major credit cards is worthwhile when trying to establish credit but you can skip the impulse to open credit card accounts at retailers in order to save a few dollars here or there. That money that you save can hurt in the long run.
If you have been impulsive and opened too many accounts you might think it a good idea to close it down but this can also have a negative impact on your score. The best thing that you can do for yourself and for your credit is not to open too many credit accounts in the first place.
As simple as these actions may seem, they are really not, as evidenced by the fact that so many people lose control of their finances. Keep your head on and remember your goals and when the temptation comes to do something that will harm your credit bring your goals to mind so you do not let the temptation take full control. In the end you’ll be glad that you stuck to your guns.