Why It's Important for Students to Set Financial Goals

Mar 06, 2012

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Far too many students lack personal finance skills to suitably manage the economic aspects of attending college. With costs for higher education rising each year, those without adequate fiscal know-how will be hard-pressed to make it through the college years without taking on high levels of debt. Learn why students should be proactive in cultivating financial literacy skills.

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Before College

Higher ed costs are rising dramatically, and it's never been more important to save for a college education. High school students who are planning to attend a postsecondary institution should begin saving as early as possible. A good strategy for college-bound individuals is to have a goal amount they'd like to save before heading to college. Students who have enough time should consider getting a job and setting - and sticking to - a budget.

While many students will have the benefit of financial aid or help from parents, hidden higher ed expenses can contribute significantly to college costs. Prospective postsecondary students should prepare for a financial commitment that well exceeds colleges' quotes for tuition, room and board. Student fees, dorm rentals and lifestyle expenses are only a few of the additional costs to expect. Students who have not already done so should set up a bank account to begin practicing money management skills for covering college costs.

Underclassmen

Making the move to college presents all kinds of new experiences, including having greater control over your money. A crucial financial tool for any freshman or sophomore is a monthly budget. Students enrolled in full-time classes often don't have significant income coming in from a job, but they may have student loan disbursements that must be managed over the course of a term. Overspending at any point could leave individuals without enough funds to cover expenses. Student cost-saving measures can help the money to go further.

It's difficult to avoid overspending without accounting for money spent, which is why tracking expenses in a budget is so important. Unfortunately, many students do end up going overboard and must take on credit card debt. This can be a costly move that leaves individuals - often already saddled by significant student loans - stuck with a financially debilitating high-interest albatross around their credit history. College students who aren't already working should consider getting a job to be able to cover expenses with cash. They might also pursue alternative money-making options around campus.

Upperclassmen

Many, though not all, college juniors and seniors have mastered budgeting basics and outgrown impulse spending. At this point in their college careers, more people are carefully scrutinizing their finances, strategizing how to get through school to graduation while taking on as little debt as possible. Smart students have even set up a budget that allows them to save enough money each month to cover the cost of loan interest payments or other long-term financial obligations.

Being cognizant of costs and having savings goals during the last couple of years of school won't just significantly diminish what's owed after graduation. The fiscal discipline demonstrated during this time may be carried over into the early years of a career - which, as many grads will testify to, can be tight financially. Student loans begin to come due and graduates, often still getting established in a job, may have limited earning power. Individuals who have consistently set - and stuck to - financial goals while employing sound money management skills are likely to be in the best fiscal shape.

Want to learn how to save some major cash? Check out five podcasts for frugal students.