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How College Students Can Work Toward Financial Independence

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  • Digital Team 

Moving out on your own can feel scary, but it is also a great way to educate yourself in life. Whether it is paying off debt, figuring out how to balance your expenses, or leaning how to invest, doing these things without financial support from anyone else can feel intimidating. The good news is that none of these things must happen quickly and simultaneously. It is important to have a working knowledge of all the things that go into an overall healthy relationship with money, but for this stage in life it is ok to focus on only a few top priorities and move slow in the process. Your college years are a great time to start taking steps to be financially independent after you graduate so you will have the option of living on your own if you choose.

Focus on Building Credit

Having a good credit score will help you get better interest rates if you need to borrow money, and you’ll need a good score for any type of home rental. Having a longer credit history is beneficial as well, so try to begin building it as early as possible. It’s ideal to get your own credit card as soon as possible. You can use for regular expenses that you know you will be able to pay off. If you are thinking about getting your first card, you can review a guide for college students.

Open a Bank Account in Your Name

When you get your own place, you will be responsible for paying utilities and rent. These bills will have your name on them, which means you will need a checking account in your name to pay these bills. You can use paper checks or go online to pay your bills. Another option is to set up automatic withdraws for your monthly bills. However as someone just starting out it is better for you to actively make the payments each month. This will teach you healthy financial habits and the importance of on-time bill payments, as well as how to manage a financial calendar. Having an account in your name will help you better manage your spending because the funds will be right there. There are also often apps tied to checking accounts, which let you access your accounts quickly, deposit checks, and even budget your expenses. When these things are easy to access, you are more likely to use them.

Come Up With a Plan to Pay Off Student Loans

Having student loans can be financially crippling, and these loans are the reason many young adults move back home after they graduate college. Having a plan and knowing the things to do if you’re deeply in debt can help you get it under control. Understand what consolidation and repayment looks like and how it can reduce your monthly payments. Know that it could take a couple of decades to pay off your debt, and the key is to be patient and consistently make your repayments.

Start Saving for Rent and Security Deposits

You are likely not paying for rent while you are in college, but you can still take time to prepare for this expense. Price out rentals in areas you are considering living in and put that amount away in a separate savings account each month if you can. If you live at home and pay rent to your parents, ask them if they would consider giving you some of the money for your apartment. The money can eventually go to your security deposit because many apartments require the first and last month’s rent, and sometimes more, depending on your credit score. There are also additional fees and the cost of moving, all of which can be paid for from this account.

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