Top 5 Ways to Avoid Going Broke in College

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1. Think first, spend later.

The world is flush with advertising targeted at awakening consumer impulses. Look no further than Disney- and Nick Jr.-loving tots who sing toy-commercial jingles alongside their favorite nursery rhymes. Similarly, before each purchase, a college student should question: Do I really need this? Why do I want this? Will it go on sale soon? Could I find this cheaper elsewhere?

"Answering these questions for yourself can make the difference between wise spending and impulse buying — often the fastest way to burn through the money you make," Rae Simons writes in "Spending Money" (Mason Crest, 2011), which is part of the young people's financial-reference series "Junior Library of Money."

2. Monitor emotional spending.

Learn to avoid impulse purchases, shopping for entertainment, shopping at the last minute, and paying full retail price for something (at the mall, for example).

"It's important to realize that buying things can make you feel good temporarily," Simons writes, "but spending money shouldn't be viewed as something to do when you're feeling down."

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3. Establish a budget.

The starting point for mastering money is earning or saving more than you spend. "It doesn't matter if you are living on campus, living at home with your parents, or living in an apartment," says Operation Hope's Mary Hagerty Ehrsam. "A budget is a simplistic way of tracking what expenses you have, or money that goes out, versus financial resources (such as) allowance, employment, grants and scholarships. Get into the habit of writing down all of your expenses, no matter how small they are."

4. Reject peer spending pressure.

It's never too early to learn that there will always be someone richer, smarter, better-looking and more popular. Money-smart college students avoid trying to keep up with friends who take fanciful midyear vacations, wear the hottest styles or buy the latest electronics. "Knowing your spending limits while in college is a gateway to becoming a responsible young adult," Ehrsam says.

5. Plan now for later.

That youthful feeling of being invincible absolutely translates to financial affairs. Consider that federal student loan debt recently has topped $1 trillion, according to the Consumer Financial Protection Bureau. All that debt is likely to affect the broader economy by limiting borrowers' ability to take on new financial obligations such as buying a car or a house.

Too frequently, college students fail to really think about post-graduation debt and how it will affect their future financial security. "If you do not have to take out student loans, consider yourself fortunate," Ehrsam says. If you do have to take out loans, borrow only what you need for basic expenses, and start paying the interest immediately.

"Although your loans are in deferment while you are enrolled in school," she says, "interest is still accruing.... One way to combat the interest is to pay it while you are still in school."

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Read more: Top 5 ways to avoid going broke in college with spending tips - The Denver Post http://www.denverpost.com/ci_23740777/college-spending-tips-five-ways-avoid-going-broke#ixzz2jzkXyd7d
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