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May 16, 2023
This fall will be the first time living away from home for many young people as they pursue college education. Some students will find it easy to adapt to their newfound independence while others may find themselves struggling to handle the added financial responsibility.
Rising tuition costs saddled on young adults, who may be unprepared to handle the stress of financial independence, can be a recipe for disaster. In 2023, the average graduate in America leaves college with more than $37,000 in debt, including federal student loans and the number can be even higher for those with private loans. When it comes time for a young person to leave the nest, financial literacy skills (budgeting, money management) can make all the difference.
Here are some tips for those high school graduates preparing to take the leap into financial self-reliance.
Learn How to Create a Budget
Budgets are your friends, and they are easy to make! First, calculate your expected income per month, including paychecks (if you have a job), grants, loans, and family contributions. This gives you an idea of how much money you have available each month and allows you to plan your spending on needs such as groceries, transportation, and so on. Once you have your needs accounted for, whatever is left can be used for saving, trips, or simple pleasures, ensuring your college experience is enjoyable without worrying about whether you can pay for basic needs.
Don’t Rack Up Debt
The idea of a student credit card sounds appealing but can be a trap for the unprepared. With proper credit card usage, a young adult can establish a record of credit card payments that help them build credit, making future loans and purchases easier. However, if the student treats their credit card like an infinite source of cash, high credit balances and missed payments could prolong the time it takes for them to get on their feet after graduation.
Some simple rules to follow when signing up for a credit card:
- Start with a prepaid card to get into the habit of budgeting. You can keep an actual credit card handy in case of emergencies.
- Research spending limits, interest rates, and terms to find the best credit card for your needs. Make sure you are aware of fees and other hidden costs that come with each card.
- Only spend what you can afford to pay back, and make sure to pay off your card in full each month.
Get a Part-Time Job
A part-time job is not only a great way to help mitigate the costs of higher education; it also provides valuable experience and helps young adults to build community and sharpen organizational skills. Even entry-level jobs require you to have some work experience and a part-time job is a great way to show initiative on your résumé.
Take Classes on Financial Wellness
Many colleges and universities offer financial literacy programs for their students. You can also reach out to administrators and academic advisors who may have information on extracurricular programs open to students.
Choose the Right Bank
College is an opportune time to find a bank that shares your values. These days, community banks boast the same mobile and online banking tools as large national banks while maintaining strong ties to the communities they serve and holding themselves to higher ethical standards. Many of these banks also offer deposit accounts with lower or zero fees for account maintenance, no minimum balance requirements, overdraft protections, and competitive interest rates. New Tripoli Bank’s Smart Start Checking Account is tailor-made for the college-bound graduate. Our mobile and online banking platform mean no matter which college you head for, you’ll have your bank account right at your fingertips.
PHEAA Student Loans
New Tripoli Bank has also teamed up with the Pennsylvania Higher Education Assistance Agency to offer private student loan options for students pursuing higher education. These loans are designed to reduce the financial strain placed on college students by waiving many of the fees associated with loan applications and offering low fixed interest rates.
Keep these tips in mind for those who are college bound. By learning good financial habits early, they will develop the skills they need to become financially secure well into the future.
Sundra Sherwin is Vice President of Branch Administration for New Tripoli Bank. She has over 25 years of banking experience and has been with New Tripoli Bank for 15 years, working in various positions at the Bank. She has been promoting financial literacy in our community through her work with the Bank for years.