Your senior year of high school is a good time to learn the skills that will help you thrive during your years in college. The things you practice now will become your habits later, so it’s important to focus on the items designed to put you as far ahead as possible.
Money management helps you lay a solid foundation for financial success down the road. Before you head off to college, make sure to keep the following tips in mind.
Learn to prioritize expenses
The first step to successful money management is understanding priorities. Practice determining the difference between needs and wants. Before spending money on what you wish you had, you need to make sure your necessities are covered.
At the same time, you should make paying yourself a priority. Setting money aside for the future is an important part of establishing your financial priorities. If you have an after-school job, you can open a savings or money market account to start the habit and earn interest.
Track your income and expenses
Have a part-time job? Every time you receive a paycheck or make a purchase, record that information. You can use a spreadsheet, a paper ledger or personal finance software. Budgeting apps are easy to use and you can sync your information with your smartphone. Knowing how you are spending your money is vital if you want to stay on top of your budget and avoid getting into debt.
Read your bank statements
Every month, your bank will send you a statement of your spending activity. Learn how to read these statements so that you can see how much money you’ve put in and how much you’ve spent. Pay attention to the fees you are charged, including overdraft fees. Overdraft fees indicate that you spend more than you earn and offer a warning to slow down your spending.
Compare your bank statement with your own records. This is easy to do if you use personal finance software. Most apps come with a “reconcile” feature that allows you to quickly and easily look at your own records to see if they match your bank statement. Correct mistakes in your own records and report suspicious transactions to your bank. Being able to read and reconcile your financial information is one of the first lines of defense against identity theft.
Try comparison shopping
Soon you’ll be making your own decisions about what to buy, from groceries to clothes to household supplies. Prices vary on items, depending on brand, retailer and other factors. Learn how to find the best value on products and services so that you get the most bang for your buck. Barcode scanning apps for your smartphone allow you to make quick comparisons between what you find in one store and what is available at other locations or online. Read online reviews of different products so that you can base your decision on quality as well as cost.
Plan your purchases
Practicing patience is one of the most important financial skills you can develop. Rather than buying what you want immediately, plan your purchases based on your priorities and then budget for them. Not only will this ensure that you have the amount you need at the time of purchase, but it could also give you time to think about whether you really want to make it or not. Instituting a waiting period can help you properly evaluate your needs versus wants, and you will make better spending decisions.
Developing strong financial skills now and putting them into practice before you head off to college will put you ahead in the money game by the time you land on campus.