College is the perfect place to learn key financial skills that will help you navigate life long after you leave MIT. For some, there’s a bit of a learning curve, but we’ve got simple, straightforward suggestions for getting you off to the right start.
Open a checking and savings account
Maintaining a checking account offers financial independence and access to your deposited funds. But not all banks are equal when it comes to student accounts and not all banks fit every student.
Choose a bank that’s best for you:
- Does it offer student plans with free or low-fee checking?
- Does it have 24-hour customer service in case something goes wrong?
- How accessible are the branches, ATMs or partner ATMs?
Choose a checking account that’s right for you:
- A debit account offers the ease of a credit card for purchases but the money comes from your account directly, instead of encouraging borrowing.
- Can your checking be linked to a savings account for transferring funds easily?
- Does your account require maintaining a minimum balance? Falling below a minimum can yield higher fees or limited account access.
Add a savings account:
- How easy is it for you to make deposits? Can you make deposits online?
- Does it earn interest? Earning interest is always good!
- Can you link it to your checking account?
- Can you arrange recurring automated transactions (deposits or transfers)?
Credit cards can offer an added sense of flexibilty—but remember it isn't cash and that you will be charged interest for maintaining a balance. Managing your credit cards wisely will help you build a good credit score; careless handling can limit your future purchasing power. Here’s what you need to consider.
- Always pay bills on time. A late payment becomes a bigger balance.
- Whenever possible, pay more than the minimum; minimums are designed to keep the balance from disappearing. Better still: pay in full every month.
- Don’t open multiple credit cards. When you do, you multiply your fees, interest and potential for debt.
- Don’t be fooled by low starting interest rates. Look for how much you will pay in interest in six months to determine how much each purchase will actually cost you.
- Consider choosing a credit card with a lower limit, which will encourage conservative spending on your part.
- Don’t treat your credit card like a debit card: your credit limit is not the same as money in the bank.
- Never use credit cards to afford a lifestyle beyond your means. If you use your credit card to “make ends meet,” you’re not actually making them meet—you’re simply extending the gap between your bills and income.
Build your money saving habits now
Making the most of your financial resources is smart both in the short term and the long run. Saving money as you go, means you’ll have more when you need it, while creating good habits that will soon become second nature to you. That’s a benefit you’ll enjoy the rest of your life.
- Make a budget of the funds coming in and the expenses going out.
- For all new purchases, comparison shop. Look online to see if there are better prices for what you need.
- Focus on experience over dollars. Instead of pouring cash into expensive restaurants, consider cheaper activities that emphasize time with friends.
- Download a budgeting or tracking app to better understand your spending habits.
- Put money into your savings account whenever possible.