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Five ways to manage money at college

If you or your child is heading off to school this fall, these reminders about your personal finances is required reading. The good news about beginning college: You have more control over your life. However, this power also comes with responsibility, especially when it comes to finances. Even if youíre not solely supporting yourself, be smart about managing your money. Too many students are graduating in the red and facing difficult financial choices when they are just starting out.There are five areas you should focus on in college.

  1. Create a budget Track your money. Once you realize how much impulse buying and other indulgences cost you, it will be easier to tell yourself NO. Figure out how much you have coming in every month, how much you have going out, when bills are due; and then make a detailed plan that shows how you are going to meet those financial obligations. Hopefully, you will have extra spending money for lattes when you are pulling an all-nighter.
  2. Saving money While you are managing your money, you should also be saving your money. Many college students think they should save money for when they get out of college, but itís actually wiser to save money for college and expenses while in college. Most schools offer on-campus jobs that range from peer tutoring to food service. Also finding part-time work during breaks or summer vacation will help defer the cost of tuition each year. If you can put away as little as $10 a month, the funds will add up quickly and be available if you have an emergency. By the way, a spring break trip is not an emergency.
  3. Student loans You have to pay for college somehow, but how much money do you really need to borrow. Ask yourself these questions:
    • Can I reduce my expenses?
    • Can I work more during the school year without jeopardizing my grades?
    • Can I work more during the summer or find a higher-paying job?
    Remember to use your student loan money to finance your education, not your lifestyle. Before taking out a loan, list all of the expenses youíre likely to have that semester and base your loan request on that, not on how much the lender is willing to lend you. The amount you borrowed is not the amount you will have to repay. By the time you finish paying off your student loans, youíll probably end up paying around 30 percent more with the interest than the amount you borrowed, depending on how many years you take to pay off the loans. Take a deep breath and find out all your options before taking out a student loan.
  4. Credit cardsCredit cards have become a way of life. They make paying for things extremely easy. Credit card companies work hard to get college students to sign up while in college. Students tend to run up balances much quicker before they understand all that a card entails. Many cards have high interest rates, unfavorable terms and allow students to spend more money than they actually have. If you get into the habit of only paying the minimum payment each month, you could be stuck trying to pay off the card for more than10 years. However, credit cards can play a vital role in establishing your credit history, and used properly can help build a solid credit history. Your budget should include paying off your credit card each month.
  5. Credit scores Many college students end up trashing their credit history by just making a few poor decisions. Missing payments or ignoring bills will remain on your credit history for seven years and adversely affect your credit score. A low credit score will follow you out of college and could affect whether youíre able to afford major purchases. On the other hand, a high credit score will get you better rates on things like car insurance, and will be crucial when youíre finally ready to buy a home. Keeping track of your finances online, setting up automatic payments for digital reminders for tuition payments and other recurring bills will help you avoid late payments and fees. Farmers State Bank offers online and mobile access to your accounts 24/7.
Entering college is an exciting time in your life. Getting off on the wrong foot financially causes frustration and worry you donít want to have to deal with. Make yourself a budget and stick to it, save money when you can, only borrow what you absolutely need, pay off every month any credit card debt and start a credit history that will work for you in the future.

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