A five-step financial checklist for college freshmen

Around the country, teenagers are preparing to leave home for the first time and head to college where they’ll take classes on how to speak foreign languages, the economy, sciences and more. But there’s one subject freshman can learn valuable lessons about even if it’s not in the classroom: personal finance. 

If parents can use this new transition to teach their children about finances, they should. Two-thirds of Gen Z college students want to learn more about personal finance topics, and 83% of college students think financial well-being is important for their happiness, according to a recent study by the Certified Financial Planner Board. That makes sense, seeing as college will fly by and these students will be on their own, navigating their first full-time jobs while paying for their housing and essentials. Learning how to save, budget, build their credit and more now will help set them up for success in the future. 

Here’s a five-item financial checklist for college freshmen (and the parents who may be helping them). 

1. Open a checking and savings account 

The first step to managing your finances is finding a reliable place to put both money for everyday spending — from textbooks to dining out with new friends — and savings. This is especially important for students who are also working while studying. 

Jeff Judge, a financial advisor and managing partner at Chesapeake Financial Planners, recommends keeping these in separate accounts (a checking and a savings account) and potentially even different institutions if it will be tempting to easily transfer your savings to your checking account and spend it. “I've watched clients' kids blow through a semester's savings because it sat one swipe away in the same app as their debit card,” Judge says. 

To find the best bank, consider your needs. If you want easy access to cash, choose a bank with ATMs on or near campus. If you’re hoping to keep this bank account after graduation, you may want to choose one with branch access and ATMs across the country. If online banking is important to you, choose one that allows you to easily manage your money via an app or select a mobile or online only account. Ideally you’ll want to look for an account with no minimum balance fee or requirement if your balance goes low, has a large network of fee-free ATMs and doesn’t charge overdraft fees if you accidentally spend too much. With Current, you sign up in minutes for an account and there are no mandatory monthly fees, minimum balance fees or requirements, no overdraft fees and you can access up to 40,000 fee-free ATMs across the country. 

If a parent is planning to transfer money to the student throughout the school year, it may make sense to open a joint checking account. 

“If the parents are giving the students money to live on or for food or incidentals, send smaller amounts every two weeks,” suggests Jorie Johnson, a financial advisor and founder of Financial Futures. “This will give the student a sense of budgeting and living off a biweekly paycheck.” 

2. Freeze your credit 

A credit freeze restricts people from accessing your credit report, and it can help you avoid being the victim of fraud if your sensitive information is stolen. It's super important for first-year college students to do. 

“Freshmen are a favorite target for identity theft precisely because nobody's watching their credit yet,” Judge says. 

You can freeze your credit by contacting the three major credit reporting agencies — Equifax Experian and TransUnion — and it shouldn’t take more than 15 minutes to do. Just remember to temporarily lift the freeze if you want to do something that would require a credit check, such as renting an apartment or applying for a credit card. 

3. Open a secured (or unsecured) credit card 

Opening a credit card now can help you build up your credit score, which can give you lower interest rates, more housing options and easier approvals for loans once you graduate. Remember that just because you can charge a credit card, though, doesn’t mean that you always should. 

“Charge a small amount each month and pay the balance off early and in full,” Johnson says. For instance, you could put a recurring streaming subscription bill on the credit card and set up autopay to ensure the full balance is paid. If you’re worried about your spending habits but also need to build credit, instead of an unsecured credit card, look into opening a secured charge card instead, such as Current’s Build Card. You can only spend the amount of money you have in your account, which minimizes risks of debt, and as you spend the funds are held in reserve to pay your bill each month. Your monthly payments are then reported to the three major credit bureaus - Equifax, Experian and TransUnion - to help build your credit score. 

4. Get your health care paperwork in order 

No one wants to think of the worst case scenario, like getting hurt while you’re away at college. But it’s important to take a few steps now so that if that does happen, your parents can help make decisions for you. 

Johnson says to sign a health care power of attorney from the state your college is located in (not your parent's home state, if it’s different). “This will allow the parents to access medical information on behalf of their student,” she adds. And don’t forget to list your parents on any medical forms and Health Insurance Portability and Accountability Act (HIPPA) disclosures as an approved contact. 

5. Get in the practice of budgeting and saving 

If you start saving and budgeting now, you can put a practice in place that can help you reach long-term financial goals throughout your life, such as buying a home, starting a business and, eventually, retirement. Start by building a budget around actual bank statements, not guesses, Judge says. 

“I had a client whose son swore he spent almost nothing on food, then we pulled his statements and found he'd averaged over $400 a month on delivery apps alone,” he adds. “The number doesn't lie the way memory does.” 

Judge also recommends setting one automatic transfer to savings the same day loan refunds or paychecks land, even if it's small. “Consistency matters more than amount at this age.”