Seven smart money habits for college freshmen

There’s a lot of financial temptation surrounding college students: credit card offers, the availability of student loans, the excitement of being on your own and in control of your spending money.

Your freshman year can be a whirlwind of activity. But make some time for one more lesson: how to form smart money habits. If you give it a little thought now, you can jumpstart a successful long-term relationship with money—and not end up crushed under a mountain of student loan or credit card debt.

The positive habits you set this year will remain with you long after you’ve earned your cap and gown. I’ve coached many students on how to be savvy with their money and maximize the financial potential of the college years. Here are seven of the most successful ideas.

1. Assume one year’s worth of student loan debt and no more. No matter what.

The average student loan is now $33,000, which makes the class of 2014 the most indebted class in history. Do what you can to stick to one year’s worth of debt, even if it means attending a community college first or working for two years before beginning classes.

It’s radical thinking for some; you may believe this suggestion too austere. But the last thing you want is to be saddled with heavy debt burdens. The college graduate unemployment rate is currently 8.5% and the underemployment rate (new grads who are jobless, hunting for employment or working part-time) stands at 16.8%, according to a report from the Economic Policy Institute.

2. Begin a social media strategy.

And I don’t mean Instagram. Using a social media outlet such as LinkedIn, where you can connect to thought leaders, managers and prospective employers, can pay off down the road when you’re job hunting. Post articles daily—three sentences of poignant commentary reflecting your thoughts and a passion to share knowledge. Set a goal of acquiring 600 LinkedIn contacts by the time you graduate.

Also use your first year as an opportunity to “clean up” personal social media accounts like Facebook, which is increasingly under scrutiny by human resources departments.

3. Watch your credit.

Take out no more than one credit card to obtain and strengthen a credit score. When I was in college, credit card providers were everywhere. I signed up for two cards and needed to work a couple of jobs to pay off the debt. Don’t do it. Based on recent legislation, credit card vendors are no longer omnipresent on campuses.

There are many attractive cards available to college students. Most likely, you’ll need a co-signer, as you won’t have full-time income. There should be a limit placed on the card, anywhere from a $500 to $1,000 maximum. The lender will most likely place strict limits on your available credit without you asking for it, but inquire anyway.

4. Consider a Roth IRA.

Believe it or not, it’s not too early to begin saving for retirement; think of all the time you have to benefit from investment appreciation. It’s OK to start small; remember, you’re trying to create a lifelong savings habit. Earnings from a part-time job are perfect for funding a Roth IRA. For 2014, the contribution limit is $5,500, and at retirement, the money is available tax-free. Also, contributions (which are made with after-tax dollars) can be withdrawn at any time before retirement, without penalty.

5. Don’t get too carried away with school spirit.

In college, I needed to own every T-shirt, sweatshirt, pen, mug—you name it, all emblazoned with the school logo. I spent hundreds of dollars on stuff I didn’t need due to my out-of-control school spirit. Limit your enthusiasm to two wearable items a year.

6. Begin a budgeting behavior.

Heck, it’s not even an actual budget; I know how busy you’re going to be. A budget mindset is enough. Be aware of your spending habits. Understand once you run out of cash, you’re out. Do not go to the credit card for relief.

And keep a conversation going with your folks. The most successful students have parents who jointly review spending with their kids on a monthly basis. It takes less than 10 minutes to discover the expenditures with the greatest impact on cash flow.

7. Study one money tip each day or week.

It’s not that difficult. Pick any financial topic. Read one article in the business section of a local newspaper daily before you hit the books. One graduate I know read about one basic investing topic weekly atwww.investor.gov. She developed a great intuitive sense about stocks, bonds, money markets—enough to ask smart questions that allowed her to maximize her 401(k) savings when she landed a job.

There’s a lot to learn as a freshman, and enjoying your college experience to the fullest is important. Just keep your money in mind, and think about how the actions you take today can either set you on the path to financial success or leave you lost in the woods.

Learn more about Richard on NerdWallet’s Ask an Advisor.

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