Top 10 Freshman Money Myths

Starting college is one of the most important and exciting times of your life. Now that you’re all “checked-in,” enjoy your college experience without worrying about where your next meal will come from by chasing away these common freshman money myths:

Myth #1: Parents Are Money Moguls

While talking to your parents may not be top on your to-do list right now, it is important to clarify who is paying for which college expenses. For example, if your parents are helping with tuition costs, what about room and board, or rent?  Will you be responsible for covering the costs of books and various living expenses such as your cell phone bill and internet access?  You also should agree to a backup plan for emergency expenses that may come up such as car repairs or travel.

Also, remember that if you’re taking out student loans, you will be legally responsible for paying them back; although your parents may offer to help.  Some students are surprised to discover that their parents took out Parent Plus loans or private loans, and expect the student to repay themso have a chat ahead of time.

Myth #2: All Banks are Created Equal

Checking accounts are great money management tools which provide quick and easy access to your money; offer safety and convenience; and are much less expensive than using other services such as check-cashing stores, money orders or stored value cards.  However, checking accounts are not all the same, so do a little research and choose an account with little or no cost to you. Also, look for one that offers services such as online bank statements and free online bill payments.  Oh… and be sure to compare their fee schedules.

Once you have an account, always have enough money in your account to cover your purchases, ATM withdrawals and written checks. 

Myth #3: My Financial Aid Package is Solid as a Rock

Your parents may have completed most of the Financial Aid application process, but now it’s time for you to take a more active role and get a grasp on how the system works.  Review your Financial Aid package and make sure you understand the difference between actual grants which don’t have to be repaid and student loans which have to be paid back even if you don’t finish your degree. Be sure to only borrow the amount you require to meet your educational and essential living expenses. And remember, you must re-apply for Financial Aid every year by filing out the FAFSA; your financial aid package may change depending on your family situation and/or changes in available federal, state and institutional funding each year.

Myth #4: Budgeting is for Geeks

One of the biggest challenges freshmen face is making their money last for the entire school year.  You may have savings from summer earnings or some student Financial Aid refunds leftover after your tuition and other fees have been paid. However, those funds will quickly drain away unless you set up a budget right from the start.

Creating a simple monthly plan will remind you of which monthly bills you have to pay such as rent, car insurance or cell phone charges and how much you may have leftover for miscellaneous expenses such as food and entertainment.  Use a budget worksheet to make it easier and be sure to revisit it during the semester to make adjustments as needed.

Myth #5: Tracking Expenses is Boring

You will be surprised at how quickly expenses such as doing laundry and going out to eat with friends can add up, so be conscious of what you are spending and set priorities.  Save money on books by comparison shopping and buying online using sites such as CampusBooks.com. To guarantee that you’re ordering the right edition, be sure to use the correct ISBN number. Also, look for free activities around campus because there is always something going on.  Use your budget to remind you of the things you must pay every month.

Myth #6: Banks Never Make Mistakes

Most banks and other financial institutions offer 24/7 online access to your account, so be sure to check recent transactions, account balances and your online statements often.  Despite this convenience, it is still a good idea to keep separate track of your purchases and withdrawals, and keep your receipts.  Merchants may not process transactions right away or may make errors.  If you see something incorrect on your statement, be sure to contact your bank right away.  You also may want to set up alerts if available at your bank that will automatically notify you if your account goes below a certain threshold or if a large purchase was made.

Myth #7: Use a Credit Card for all Your Purchases

If you do have a credit card, either in your own name or one on your parent’s accounts, only use the card for emergencies.  Keep your credit limit low and be sure to pay it off every month to avoid interest charges.  If you are carrying a balance, set a goal to pay it off as soon as possible, and always pay on time to avoid late fees on top of interest charges.

Myth #8: Don’t Worry About Student Loans Until You Graduate

Freshman year is a great time to estimate what your student loan payments will be when you graduate.  Use this handy loan calculator as a place to start.   It’s also a good idea to compare your estimate loan payments to the monthly income you expect to earn after graduating.  A good rule of thumb is to keep your student loan payments to less than 10% of your take-home pay.

Myth #9: Credit Scores aren’t Important for Students

Having a low credit score could affect your ability to rent an apartment, buy a car or even get a job, so be extra careful. Make smart money decisions, such as always paying your bills on time to protect your credit history. You can check your credit report for free once a year by visiting AnnualCreditReport.com.

Keeping your identity safe is also very important.  Never share your PIN number with anyone and never provide personally identifiable information such as your Social Security number or your mother’s maiden name to an online solicitor unless you are absolutely sure the request is legitimate.  Also, be sure to keep your important papers in a safe place and shred anything that an identity thief could utilize to access your financial and other accounts.

Myth #10: I Got This

If you are feeling overwhelmed and concerned about how you are going to make ends meet, please don’t hesitate to talk to your parents, Financial Aid counselor or a trusted peer.  You don’t have to go it alone.

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