Four of the Smartest Personal Finance Moves College Students Can Make This Year

1.Focus on paying down your debt before placing priority on retirement.

     This may seem like common sense, but student loans only grow and gain interest with time. Retirement is more of a long-term goal. The money made in a part-time job will make no dent in retirement. It can definitely make a dent in student loans, though. Retirement accounts are best set aside until your career begins. 

     The best plan of attack is to just know your loan plan really well. Ask questions! These can include the costs of interest, the first payment date and how many years you’ll have to pay the money back. If you don’t have subsidized federal loans, your loans will collect interest the entire time you’re in school. And it adds up (potentially hundreds or thousands of extra dollars). So, consider paying some of your interest payments while you’re still in school. These can be funded primarily through a part-time job. It’s a small sacrifice that will set you up for success in the long run. 


  1. Build up good credit using a credit card.

     Once you’re out of school, your credit score will matter greatly to potential landlords and employers. They’ll likely run it as part of a background check. It can be equally as bad to have no credit score as having a bad one. So start building one early. Open a credit card at your bank and use it for small purchases. Focus on ones that you know you can instantly pay back using money from your checking account. Good examples are small grocery store runs, little cosmetic purchases, lunch out with friends. If you pay it off instantly, it won’t collect interest and will remain easy to pay off. Assuming you can do this regularly, over the course of a few years, you’ll have built up some good credit. This will also help in the future when you try to buy a house or a car.

     Take Gabe Ferris, a sophomore at American University, for example. Gabe has a credit card that he uses for purchases that are under $15 only in order to do just this. “Most of my purchases are small because they are easier to pay back at the end of the month and because they encompass nearly everything I need or want to buy regularly.” And even though he can’t visualize those bigger purchases like houses or cars right now, he still wants to work toward them. “That’s precisely why I have and use my credit card. I think it’s important to build credit at a young age, so I have an established and high credit score when I look to lease an apartment or want to finance relatively big purchases in the next few years.”