3 Financial Tidbits for College Freshman
The excitement in the air around late May/early June is so thick, you could almost cut it with a knife. Millions of 18-year-olds all over the country are graduating from high school and entering a completely different stage of their lives. Many are off to college, some are taking a year off, some are going straight into full time work.
All that excitement is contagious!
It’s been almost 24 years since I was a freshman in college, but I remember that time in my life like it was yesterday.
I remember arriving on campus that first day in August. I remember the campus was in bloom
and absolutely gorgeous. I remember meeting my roommates and their families for the first time. I had flown in from out of town (AZ to IN), and my parents couldn’t come drop me off, so I was on my own after my older sister who lived 5 hours away drove me to campus. I remember my roommate’s family invited me to dinner and we went to Fazoli’s and my roommate ate plain pasta with butter and
salt, which I thought was crazy (she’s one of my best friends to this day 😊 ).
These memories are so vivid in my mind, I can almost reach out to touch and taste them. It was a formative period of transition, independence, and growing up.
While my parents had been great role models of financial discipline, there are still things I wish I would have known before leaving the comfort of my parents’ home.
1) I wish I would have known that the credit card applications that started arriving in my campus mailbox had lots of strings attached!
It seems that when the credit card companies learn of your new status as an incoming freshman, they open the flood gates of offers!
[Side note here. Recently Casey’s son, Zen, turned 18. To everyone’s surprise, he didn’t start getting a ton of credit card offers in the mail like I had experienced at that age. Turns out that the Credit Card Act of 2009 significantly reduced the ability for creditors to make unsolicited credit offers to young consumers! While offers might not be coming by the buckets, it still makes sense to tread carefully with credit cards!]
It is so tempting to apply for these offers and open multiple lines of credit, but boy, it can get you into trouble quickly!
If I had the chance to give my younger self advice, I would have told me to open ONE credit card with a very low limit (maybe $500), and THAT’S IT! I would tell my younger self to use the credit card only to the extent I could then pay off the balance. Opening a credit card young, with a small credit limit, and the discipline to pay it off every month, starts the clock ticking on building a really great credit score. One of the components to a credit score is longevity, and so starting young can be really smart, if you can be disciplined about it.
2) I wish I would have known to look for a bank that does business in my hometown, and where I went to school.
In AZ where I lived, I had one bank account, and in South Bend, IN, where I went to school, that particular bank did not do business. That was an inconvenience and a hassle.
Looking back now, I wish I had done some research as to what bank was in both locations,
as I would have set up an account with this bank before I got to South Bend. It was a pain to have two bank accounts, and at that time, transfers between the two were not easy to do!
3) I wish I would have understood the difference between the student loans I was taking.
While I had gotten some scholarship money, it wasn’t quite enough to cover tuition. Having filled out the Free Application for Federal Student Aid form (FAFSA), I was told I was eligible for different types of government loans.
If I had the chance to go back, I would have told my younger self to read up on what each type was, and what the long-term implications of accepting the loans were.
For example, just knowing that “Subsidized” meant that my loan would NOT accrue interest during school, while “Unsubsidized” meant it WOULD accrue interest during school would have gone a long way to making better informed decisions. (See explanation here: https://studentaid.gov/understand-aid/types/loans/subsidized-unsubsidized).
Those four years of my life were some of the best and I’m so glad for them.
As I see and hear the excitement for this upcoming group of brilliant young minds, I hope the same for them.
If anyone in your life is heading off to begin their college grand adventure, feel free to share these few tidbits with them. Maybe it will help someone get started on a slightly better financial track and enjoy all the places they will go.
As always, we are grateful for you, our clients, and that we get to be on your portfolio management and financial life planning team.
Thank you for allowing us to serve!
Daniela Jones, CFA®, CFP®
Partner & Financial Life Planner
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3 Financial Tidbits for College Freshman
While my parents had been great role models of financial discipline, there are still things I wish I would have known before leaving the comfort of my parents’ home.
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