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Learning financial lessons now can help young people build a solid foundation for the future

Posted on August 11, 2011

With the cost of college tuition skyrocketing and the average college graduate’s student loan debt tipping the scales at more than $20,000, there are some crucial financial lessons students should learn before they step foot on campus.

As an increasing number of college-bound students are expected to foot the bill for the cost of obtaining a higher education, it is more important than ever for students to learn proper money management skills in order to build a solid financial future.

Lesson No. 1: Keep lines of communication open. Will you be expected to get a job while you are in school? Will mom and dad be pitching in to cover the cost of your books? These are all questions that need to be addressed. The financial expectations of both the student and the parents need to align in order to develop a solid plan.

Lesson No. 2: Be realistic. The best way to prepare your finances for life away at school is to first school yourself on the basics of budgeting. Simple expenses such as doing laundry and going out to eat can add up quickly, so don’t forget to factor those costs into your budget. Your budget should also contain some personal savings for emergencies, unplanned expenses, and any other savings goals you may have.

Lesson No. 3: Track spending for the first semester. You may be surprised how quickly small expenses can add up. For example, grabbing a cup of coffee and a bagel each morning before class can end up setting you back more than $100 a month. Tracking your spending will help you refine your budget once you can clearly see where your money is actually going.

Lesson No. 4: Set goals. Whether you’re saving for a Spring Break trip or a new pair of jeans, setting goals will help you stay within your budget and keep you motivated. Make a list of short-term, mid-term and long-term personal financial goals, and then prioritize your list based on importance.

Lesson No. 5: Consider consequences. Although this applies to all aspects of student life, it’s especially important when you’re making big financial decisions. Opening up a credit card when you’re young may seem harmless, but if you’re irresponsible with your spending, you could end up with a low credit score and high debt, which could affect your ability to rent an apartment, buy a car, or even get a job.

If you need help creating a budget, the counselors at Money Management International (MMI) can help. MMI offers free budget and debt counseling to those who need help with budgeting, money management skills, and credit issues. Visit MoneyManagement.org for more information.

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About Money Management International

Money Management International (MMI) is a nonprofit, full-service credit-counseling agency, providing confidential financial guidance, financial education, counseling and debt management assistance to consumers since 1958. MMI helps consumers trim their expenses, develop a spending plan and repay debts. Counseling is available by appointment in branch offices and 24/7 by telephone and Internet. Services are available in English or Spanish. To learn more, call 800.432.7310 or visit www.MoneyManagement.org.

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