What Every Bright Eyed College Freshman Must Know About Money Part 1
written by Credit-HQ ExpertHeading out for that first year at college is an exciting experience. But before you set out to conquer the world of college academics, frat parties or freshman hazing, there are a few nuts and bolts about being on your own that you should learn. We are here to give you those basics so you can get through that exciting first year away from home in school in good shape financially.
First of all, you are going to need some help with the movement of funds. Even if mom or dad are paying your bills, you will need a bank account for money that is sent to you for your daily expenses. If you work as well as go to school, you need a reliable checking account to manage your earnings and to pay bills with. Banks near universities usually offer checking accounts to students that carry no fees. Take advantage of these programs.
Make a plan for how you will get cash from your checking account each day. An ATM card is perfect but before you even go to the bank to open your account, scout out the campus and the neighborhood around campus to be sure there are ATM machines that are easy to get to. If you don’t have a car, you will need an ATM you can walk to.
Be aware of ATM branding when you scout out the locations around the area for you to use. ATMs are owned by particular banks so just because you find five ATMs on campus, that doesn’t mean all of them are operated by the same bank. Use the bank that has the most ATMs you can get to because if you only use ATMs from that bank, you will not have to pay any fees. Using ATMs from other banks will almost always result in a hefty fee being charged against your account.
Keep in mind also that the use of a debit card or by overwriting checks when you make purchases, you can get cash without fees. By just thinking ahead, you won’t come up short when you want to take that cute coed on a date and you have to pay for the pizza. Debit cards are great because you can use them like a credit card but the money comes right out of your account like writing a check. Merchants love them too because they get paid immediately for your purchases. A debit card is a powerful tool but it can hurt you too.
Learn early on to keep track of your transactions including debit card purchases. If you are about to leave home to go to college and don’t know how to balance a checkbook, go back in the house and get dad to show you how. A great way to manage your checking account is to use a computerized check ledger like Quicken so you just enter your checks or other bank transactions and the computer does all the math. This is a godsend when you need to keep your brain energy preserved for classes, assignments and exams.
Learning to balance your checkbook may be the most important skill you learn in college because it is vital to avoid overdraft fees. If you spend all of the money in your bank account, the bank has a system where they either bounce the checks you write or put your account into what is called “overdraft” which means it has a negative balance. But banks make a lot of money this way because every time you have a check or transaction that there are insufficient funds to pay, the bank hits you with a hefty fee for each overdraft they handle.
That means that if you wrote five checks for ten dollars and each of them went into overdraft, that doesn’t mean your account is $50 overdrawn. For each check, the bank might charge your account $25 in overdraft fees. So for covering $50 worth of checks, you wake up one morning with your account $175 overdrawn. You can see that you should do everything in your power to avoid over drafting your account. And the number one weapon against letting banks nail you for these fees is to learn to manage your account by keeping an up to date checking account ledger and learning to balance your checkbook every week.
Click here to see Part 2: What Every Bright Eyed College Freshman Must Know About Money Part 2
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