By Paula Pant, WiserAdvisor contributor
College is an exciting time, but it's also an expensive time. With the average debt for graduating seniors hovering around $29,000 (according to CNN), every incoming freshman should be taking a crash course in College Finances 101.
So before you hit the books, study up on these seven essential tips to get a handle on your finances and get the most out of your college experience, for the lowest cost possible.
1. Know Your Financial Aid Options
Most students need some kind of financial aid to help pay for their education. The key is in making the most of the options available to you.
In addition to university-specific scholarships, research whether you qualify for other funding thanks to hobbies you pursue, the major you're going into, and organizations you and your parents belong to. There are scholarships and grants out there for more than you might realize, and the more you can avoid borrowing to fund your education, the better.
If you do wind up having to borrow, moderation is key. Research your options, from federal loans to state tuition assistance programs to private loans, and make sure you're clear on the terms of payment so you know exactly what you're getting yourself into. Only borrow the bare-minimum that you need to cover your tuition and books. Don't buy yourself a lavish lifestyle, bankrolled by loans.
Also bear in mind that some college "expenses" aren't necessarily mandatory. If you live close enough, could you commute to class rather than paying for an on-campus residence? Could you learn to cook so you can avoid costly student meal plans? The full college experience doesn't have to be a bank-breaker if you get creative.
2. Budget, Budget, Budget
You wouldn't manage a full class load (plus a part-time job, plus a social life) without some sort of calendar or agenda, would you? (Please say no!) The same goes for your finances: You need to have a plan in place to keep everything in order, or you'll find yourself falling behind fast.
You don't have to track every dollar (who has time for that?), but have a basic idea the money that's coming in and going out every month. You should know, for example, that you earn $1,500 per month through your part-time job, and one-third of that money ($500) goes towards rent. You should also know that you spend about $200 per month on utilities, another $200 on groceries, and another $100 on gasoline, leaving the last $500 per month on household goods from Target, the occasional restaurant meal, and drinks at the college pub.
In other words: You don't need to know that you spent exactly $97.29 on gasoline last month. But you should know ballpark figures.
3. Try the Envelope System
Keep it easy to stay within your budget by using the "envelope system." Under this system, you set a budget for the week, the month, or the next pay period. You might decide, for example, to spend $200 on groceries this month and $50 on gasoline.
You put that money into envelopes marked "groceries" and "gas," and you pay for those expenses out of those envelopes. Once you're out of money, you're out -- no more groceries until your next pay period.
This system keeps you from over-spending and prevents you from accidentally going into debt. When you can physically see how much cash you have left, it's a lot easier be careful with it.
4. Steer Clear of Credit Cards
Whenever possible, try to avoid charging your expenses on plastic. Being able to "afford" an extra concert ticket or fancy dinner isn't worth having to work extra hours to pay down sky-high interest rates later. You're already probably going to emerge from school with some student loans to pay off -- don't saddle yourself with extra payments from credit cards.
If you do think you might need to resort to holding a credit card balance, do your research. Credit card companies can hit students with super-high interest rates and other charges because they know they don't have as many options as those with more established credit. Don't simply sign up for the first offer that comes in the mail. Instead, look for something that offers lower interest rates.
5. Establish Credit
That said, it's a good idea to establish a credit history. The easiest way to do this is through owning a credit card.
But a credit card puts you at risk of potentially overspending. How can you work-around this?
Apply for a credit card. When it arrives in the mail, cut it up immediately -- but keep the underlying account open.
Make a small, recurring monthly purchase, like your Netflix subscription, with the account number. Set up auto-pay so that you'll never be late on a payment. Voila -- you're now building a credit history, without putting yourself at undue risk.
6. Learn to Love Frugality
Yep, you're gonna be one of those people who look back fondly on their Ramen noodle days and their campus apartment furnished with hodgepodge hand-me-downs. And you know why you'll be looking back on them fondly? Because future you will be financially comfortable, since you made smart money decisions now.
Don't be one of those students who decide they must live the high life in order to enjoy their college experience. (On the contrary: Being broke is part of the college experience.) You can reward yourself for a long week of studying by having a game night with your friends, rather than lining up shots at the bar. If ever there was a time in your life when it's okay to play the frugality card, it's now. Your future self will thank you.
7. Play Up Your Student Discounts
You know what else you'll never be able to enjoy as much at any other point in your life? Getting mad perks just for being a student.
Students can reap all sorts of benefits with their campus ID, from discounts at local restaurants to a percentage off that new laptop you need to get for class. Before you make any major purchases, like a computer or an expensive set of paints for your art class, ask the retailer about student discounts.
College isn't cheap, but if you make the right moves, you can keep these costs at a reasonable level. Enjoy the simple things in life, like spending time with your friends, and accept that you're going to live like a pauper for a few years. But the eventual payoff will be worthwhile.
You know you can't afford it. You might as well be burning your money.
A good credit history is essential to a successful financial future. Landlords, lenders, insurers and even employers use it as a way to judge you.
Yes, you want to make sure that you establish a credit history, but that does not mean taking out every credit card imaginable. Taking our high-interest cards with large balances can lower your credit score and lead to overspending.
If you want to increase your credibility in the eyes of lenders, paying bills on time is essential. Also, it is a good way to avoid unnecessary late fees!
A graduate degree is not only a financial investment, but a time investment. Before embarking on a post-graduate degree, it is important to do a cost-benefit analysis to ensure the diploma you are seeking is right for you.
Going after a degree at a time when you have to take out enormous student loans just to graduate puts you at a significant financial disadvantage once you finish school.
It is called your emergency stash for a reason! And no, a flash sale at Nordstrom Rack is not an emergency.
Be honest, when was the last time you actually had a full fridge? Despite what you keep telling yourself about how expensive groceries are getting, the bottom line is that eating at home saves money, especially if you are single.
We understand that retirement could not feel further way when you are in your 20s. But it is never too early to start saving. Need an incentive? When you are young, you have the advantage of giving your investments much more time to accrue interest and grow.
As much fun as it is to get a tax return at the end of the year from the IRS, you only get a big refund when your employer is withholding too much money from your paycheck during the year. If that's the case for you, adjusting your withholdings may be a good idea.
Most budget gurus suggest that your rent should be no more than 30 percent of your monthly income. If you are anything like us, you are paying much more than that.
Follow WiserAdvisor.com on Twitter: www.twitter.com/WiserAdvisor