This is a guest post from the Studenomist of Studenomics. A resource for twenty somethings that want to be informed about money management without all of the boring rhetoric. If you enjoy this article then please consider subscribing for free updates.

As I enter my final year of college I’m very thankful for the financial skills I have developed over time. However, I had to learn these financial skills the hard way. Today I want to tell you guys about what I wish I knew about managing my finances before I started college:

Any income is a good income. As a teenager, I thought certain low wages weren’t worth my time and instead chose to meet with friends. Together we would find ourselves spending money on foolish things. After a little bit of reading and a kick of common sense, I realized that accumulating money is usually a slower process than it’s portrayed in the movies.

Whether you begin saving $50 a week or $50 a month, the simple act of saving will improve your financial life more than most college students. If you have so much student debt you feel you can’t save money, do not worry. You can still improve your financial situation by slowly paying off the debt as you go. You will really thank yourself for this when you graduate from college with minimal debt or no debt at all.

It’s not how much you earn that matters, it is how much you save that counts. There are only 168 hours in a week. You can try to fill up as many of those hours as possible with work but at the end of the day you need to learn how to save more money. If you get used to earning lots of money and spending lots of money then what will happen if you ever pursue an entrepreneurial venture and experience slow periods of income?

Sure after you graduate from college you could work 70 hours a week and earn $50,000 a year. What’s that worth if your bank account is empty at the end of the year? I could go on with clever anecdotes and examples but I will stop right here. What you earn isn’t impressive, it’s what you save that should be impressive.

Best way to track your spending is by writing it down. You may feel totally in control of your money but do you really know where it all goes? I thought I knew where my money went until I tried tracking it on my cell phone one day. I was brutally honest and kept track of every penny that I spent. After a few weeks it came to my attention that I had many leaks in my budget.

Saving money reduces stress. Having money saved up for life’s little surprises helps me sleep better at night. Whether you want to call it an emergency fund or money for a rainy day, the money reserve will help you financially deal with emergencies.

I have friends that are worried to death about what they would do if something went wrong with their car. Why? Because they have no money saved up to deal with deviations from everyday life. If you absolutely refuse to take saving money seriously because you want to enjoy life then please consider at least saving money for a rainy day.

I will stop writing here so you guys can get back to whatever else you were doing. All I ask is that everyone try to share one thing they wish they knew about managing money before beginning college. I would also highly recommend reading 12 things I learned by 42 but wish I knew by 22 by Ron.

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All across the land parents are in shock. They’ve just opened the first of many bills for college and the numbers aren’t pretty. Combined with meal plans, housing costs, spending money, books, fees, and tuition college expenses total more than they ever imagined. Even considering all the pre-college expenses they paid, they’re still in shock.

Even though your new student has entered college, there are still some ways to defray some of the costs by applying for financial aid, loans, and even scholarships! Even if your student opted to go for an online degree, financial aid options are still available (getting a degree online is a great way to reduced college costs).

“Sending a kid to college is like buying a new car every year … and never getting to drive it.”  — Anonymous parent

Financial Aid

Most schools award financial aid in the spring, but if your college bound student has already entered school and you’ve experienced some financial setbacks, you might be able to convince the student financial aid office to reconsider your situation. Most aid is awarded based on last year’s tax returns, but schools can consider your current year’s income and assets.

The key to getting the help you need is documentation, documentation, documentation. Have copies of any documents to prove you’ve had a financial setback – medical bills, unemployment paperwork, or paycheck stubs.

Scholarships

Scholarships are awarded in the spring, but many go unclaimed. Take some time and research available scholarships to see which ones your student may qualify for. Take the next step and ask if money is available year round for those in need. Asking is free.

Parent Loan for Undergraduate Students

Also known as a PLUS Loan, this loan is made to the parents. Its repayment schedule can be delayed until the student graduates and currently has a fixed rate of 8.5 percent.

Typically, PLUS Loans do not require a very high credit score, but a bankruptcy or a home foreclosure could derail your application as could defaulted loans or those more than 90 days past due.

BUT, if you are rejected for a PLUS Loan, you are automatically eligible for a higher limit on the most popular student loan, the Stafford Loan.

Stafford Loans or Federal Student Loans

This is the type of student loan I received and the one that helped me finish my degree and later, to help me get an MBA. It’s the most common student loan most students receive.

Stafford loans are available to all full-time students regardless of income or need (certain limits do apply). Right now a Stafford loan’s fixed rate is 6.8 percent and, depending on your classification in college, you can annually borrow $5,500 (freshmen), $6,500 (sophomores), or $7,500 (juniors and seniors).

Private Loans

Private educational loans from financial institutions haven’t completely dried up, but the credit crunch has caused them to severely shrivel. I’ve heard that some credit unions are beginning to loosen the purse strings and are offering very good rates. Try visiting www.studentchoice.org and search for participating credit unions.

Loans MUST be repaid!

Most of you are thinking, “DUH!” but there are more and more people out there that are bemoaning the fact that they have to repay student loans. Failure to do so will damage your credit score and most student loans aren’t eligible to be included in bankruptcy. So plan now to make your payments!

[tags]financial aid, college tuition, tuition, college expenses, scholarships, student loan, PLUS loan[/tags]

photo credit: rutlo

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Sallie Mae and Gallup teamed up to determine how families really pay for college and the results were surprising – at least to me. Interviewing 1,404 respondents by telephone from May 1, 2008 through June 1, 2008, the study found that the majority of student’s expenses are absorbed by their parents.

Average percentage of total cost of attendance paid for each source

• 36 percent of expenses were paid by parental savings or income
• 25 percent of expenses were paid by grants or scholarships
• 14 percent of expenses were paid by student borrowing
• 10 percent of expenses were paid out of student savings or income
• 9 percent of expenses were paid by parental borrowing
• 6 percent of expenses were paid by friends or relatives

Remember, this is how the average family paid the total bill. Those number change drastically depending on parental income. As parental income decreased, the amount of grants and scholarships rose. If you’re like the average American, you’ll use a similar combination of these options.

That means that 71 percent of college expenses were paid without borrowing and that’s great, but 5 percent of students paid their college expenses with a credit card (ugh). Buried down in the report was an interesting little nugget: Families who BORROWED, spent more money than those who didn’t, exceeding the non-borrowers by 33 percent!

This finding would seem to support the oft cited axiom that borrowed money is more easily spent than non-borrowed money.

What are your plans to pay for college? Will you borrow? Is it worth it? Have you made plans to finish your education?

The full PDF version of the report is available.

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