How Are Your Financial Literacy Skills?
Personal Finances Are a Big Part of Planning for College
by Deidre Green, age 18
Are you planning to go to college?
A lot of us say we plan to go to college, but how many of us are really planning for college? It’s a lot easier to say it than it is to actually do it.
Planning for college includes financial planning. Many of the expenses that you take for granted now, or that your parents pay for now, will become your responsibility when you get to college.
Most current college students know this is true. By the time they get to college they wish they had saved more money while they were in high school.
We have been talking about this subject a lot lately here at the Free Press. We have come up with some tips we think might be helpful for younger readers. What follows is a list of terms and expenses that will be familiar to most of you. But they are also places where you can spend and save wisely. Once you are spending and saving wisely, you’re going to feel like you’re really planning ahead for your college education.
A lot of young people spend way too much money on cell phones. If you feel like you need a cell phone, make sure you get the best deal possible. The key to this is usually signing an agreement with a particular company. It’s often cheaper to join a family plan than to open your own account. (This principle is even more true if you can join an existing family plan.)
Most packages come with free nights and weekends minutes, so look to get a plan that limits your so-called “anytime minutes.” If you’re really thinking ahead, it’s not that hard to limit the amount of time you spend on your phone during the day.
And whatever you do, don’t go with a prepaid cell phone. “Buying minutes” is ridiculously expensive. It’s a scam aimed straight at the pocketbooks of kids with limited financial literacy skills.
For many people, especially young people, credit unions are a better choice than banks. Banks tend to charge fees for things like low balances and ATM withdrawals. Therefore, young people just starting out on a saving-for-college plan are pretty likely to run into these fees. While five, ten, or twenty-five dollars at a time may not seem like a lot of money, it will really add up over time and cut into your savings.
Credit unions also offer better interest rates for people who are just beginning to save money. Look at money market and CD rates at local credit unions and compare them to rates available at banks. You’ll see what we mean.
pay yourself first
This is a simple principle that experienced savers have learned over the years. It simply means that the first check (or deposit) you write every month should be to your savings account. Hopefully, you will quickly get to the point where this savings account is a money market, CD, or other interest-bearing account. Then during the rest of the month, live off of what you have left.
You may find yourself going out less or buying fewer new things, but over time, you won’t notice the difference. If you stick to this principle every month, you will be amazed at how quickly your savings can add up. When you get to college, you’ll be glad you followed this simple rule. You will not only have learned helpful life long tips that you can use to save money, but you will also have more money in your pocket.