EVERYONE CLICK HERE. You're input is greatly appreciated.

[Christian713]

Hello everyone,
I'm 17 years old and have very little capital; furthermore, I'm an idealist with an incredibly naive disposition. To be honest, I don't even have a savings account. I have nothing, pretty much--except, of couse, what's in my pocket.

I'm most likely starting college next year and 75% of the tuition wil be covered by scholarships I've already acquired.I really don't know the ways of the real world; and having realized this, I'm overwhelmingly tentative. Being that once I turn 18 I'm on my own, any advice given here will be earnestly absorbed and appreciated.


I would like recommendations from each one of you on how I should start my financial venture.
I literally mean: How should I arrange my inception into Capitalism.

I'm mostly interested in:
How should I go about choosing which bank suits me best. Especially since I'm young and poor.



I'm also interested in how to start building my credit.







Thank you all.

[Ima saver]

Do you have a job, are you earning any money?

[thriftymom]

My suggestion on finding a bank would be to look primarily for a bank that doesn't charge any fees. Look for one that doesn't require anything like a minimum balance or direct deposit in order to avoid any fees. (Just because you may be able to meet those requirements now, you never know what might happen in the future). My bank has no fees, they give me free checks and have one of the better interest rates on savings in the area. You can compare rates on savings accounts once you find a few banks that don't charge any fees. Usually credit unions are a good choice. Often times, they have better savings rates and no fees. If you go with a Credit Union, make sure they are a member of SUM for ATMs. Then, you can use any SUM ATM and avoid ATM fees. If the bank you choose, is not a member of SUM,you should make sure there are plenty of them around in the area where you live & work so you can avoid paying ATM fees by using other bank's ATM machines.

Once you've accumulated some savings, you can open a higher interest savings account. I prefer one like at ING Direct. The money is liquid meaning you can withdraw it whenever you need it, but it makes more interest than in a regular bank's savings account. It just takes a few days for the money to go from one account to the other as opposed to a CD where the money is locked into the account for a certain amount of time and there are fees if you withdraw it early. For comparison, our bank's interest rate is around 0.85% and the ING Direct Savings account's interest rate is 4%- big difference!

Once you've increased the amount you have in savings so that you have enough to cover yourself in an emergency like needing to replace your car, etc. then you can start to invest some if you'd like. That part, I know nothing about- sorry! Lots of people here will be able to help you with that, though!

[thriftymom]

As far as building your credit goes, I would apply for ONE credit card for now ONLY if you trust yourself to pay the balance in full each month. Choose one with no annual fee. Also, there are tons out there that give you money back on your purchases. The ones I am familiar with are Citi Dividend & AT&T Cash Rewards. There are other ones with Chase and Discover as well. There is another thread called, Citi Diamond Preferred, I think- you should check that out as well as the websites of the various cards. You should probably also try to find one with the lowest interest rate, just in case you slip and don't completely pay it off once or twice. However, usually the Rewards cards have higher interest rates than those without rewards.

**Some people might say that carrying a balance improves your credit, but I don' t think all of the extra money you pay in interest is worth that. Your credit will be good if you don't miss any payments regardless of if you carry a balance or not. Here's a true example- when we bought our last car, the salesman told us that the person with the best credit he has ever seen was an old man who had never had a credit card in his life! I hope this info helps you as well as what I said in the last entry.

[PrincessPerky]

As far as actual into to capitalism, play the game, then leave.... meaning don't think you have to turn into a consumer just cause you have a job (err you getting a job to pay the other 25% of the college education?)

I used to be told I was essentially spoiled, I never said 'I wish I had..." I got what I wanted, I just wanted what I could afford. (wonder what happened!)

So my advice is to NOT enter the world of capitalism for more than you need to. Get the job, dump the loot into a no fee account pay for the college classes, but don't go thinking you 'NEED' everything just cause you now have income.

[Fern]

Visit bankrate.com for comparison of bank rates. Everything you need to know.

[katwoman]

As far as credit goes apply through your school. You will see applications posted all over the place and these are coded with your school so don't lie on them! They will know you are a student. You will get more points if you have a checking AND a savings account so set those up first and don't ever bounce a check.

Pick only the best like AMEX and CHASE, etc. Stay away from Capital One and Orchard Bank. Stick with cards that don't charge an annual fee.

Try not to apply for department store cards. Too tempting.

You can set up email alerts to know when payments are due and when payments have posted. NEVER pay a creditor late. This is what kills credit scores. Pay more than the minimum. Better yet, pay the balance every month.

[CJsoccerchic]

SAVE SAVE SAVE SAVE
Don't squander your money. ex. If you see some gum at a store that you want to buy, don't buy it. It's not a need. You'll be amazed at how much money you spend on PURE JUNK. Resist the urge to buy junk, eat out and save money, stay in your dorm, do your homework, and cook your own food - COoking your own food is WAY cheaper then buying from restaurants all the time. that's my two cents!

[Christian713]

Thanks for that bit of commonsense.

[sweeps]

Christian: I agree with the comments others have said about saving your money and building credit. All great advice. But thinking longer term for a minute, your future earning potential will always be your biggest asset. While you're in school, get involved in clubs and organizations -- meet some people and make connections. It's a cliche, but it's true: It's not what you know, it's who know you. In addition to making some good friends, you can help each other with career opportunities later on.

[Christian713]

I'm incredibly grateful to all those who've posted advise thus far.

Thanks alot everyone.

But please continue.

[Haku]

Hello Christian. You seem very level-headed for someone who confesses to be naive.

College has a world of its own, much like the "real world", although the two are not necessarily the same. Not really.

Still, it has its pitfalls and dangers, and the rules of money remains the same in both worlds.

For starters, the good news is that you're going in with a healthy scholarship, and that will help greatly in the long run. For additional fundage, I recommend looking into a part-time job, a paying internship/work co-op (when you get there), and grants and sponsorships.

Banks. It's already been mentioned, but the best rates are not brick-and-mortar ones. If you insist on a brick-and-mortar, be sure to shop around. Go to all the institutions you can comfortably get to; shop and compare. Some banks will even offer special student incentives, usually around the Fall season, to attract the Freshmans that are just coming on board.

Those things, however, are not going to be the real problem. The real problem is the daily money "leaks" if you will. One day, the friends you're hanging out with might decide to go to a coffee shop. Next day, it's an ice cream shop. So on and so forth. $5 here and there doesn't seem like a big deal, and by themselves, it isn't. However, they WILL add up, and pretty soon, you're out of money before you know it.

This gets worse if you have credit cards or student loans and think it's free money. It is not, and soon, you will know the ugly truth about "real world" debts, and you will know its crushing weight first hand. That's why I strongly advise against credit cards if you can help it. I had it once. I don't have it or use it anymore, if it means anything.

The fundamental principle of personal financing is fairly easy actually. You ready? Ok, here it is: Earn more, spend less. That's it!

However, doing it is the hard part, and for many of us, we're still paying for our mistakes. At the very least, I would learn how to set up a budget. I would literally sit down and spend time trying out ways to create and Stay on a budget. There are lots of ways to keep track, but it really depends on what works best for you.

While you may be young, you have something that most of us on here don't have (as much of): Time. Time is a beautiful thing, especially when mixed with the intoxicating power of compounding interest working for you. Or, it can also work against you. If you are wise, and I think you are, you will do everything within your powers to have it work for you rather than against you. This too is something I wish I learned when I was your age.

Take care!

[Christian713]

Hello Christian. You seem very level-headed for someone who confesses to be naive.
We're all naive, I think; I just tend to be open about it. Also, some are more than others.


While you may be young, you have something that most of us on here don't have (as much of): Time. Time is a beautiful thing, especially when mixed with the intoxicating power of compounding interest working for you. Or, it can also work against you. If you are wise, and I think you are, you will do everything within your powers to have it work for you rather than against you. This too is something I wish I learned when I was your age.

Thank you--very much.

[Christian713]

Oh, and Yes, I will be getting a part-time job to pay for the other 25%.

[Christian713]

All right, after having done a bit of research, I've returned for your further input.



1.) what other means are there to build a credit score without actually getting a credit card?

2.) When making a bank account, from my understanding, go for ones that: have good interest(possibly above 3%). Also, to make sure the interest is tax free and that it can be withdrawn at any time;
and one with no overdraft. Now, I don't know what overdrawft is, so I was hoping someone with a comprehension of overdraft to elaborate a bit.

3.) How would you all, if given the opportunity--well, the misfortune of not having money--start if given a thousand dollars. Anything brief will be greatly appreciate.

[sweeps]

:

[sweeps]

Originally Posted by Christian713

1.) what other means are there to build a credit score without actually getting a credit card?

Any type of fixed loan (mortgage, auto loan, student loan, etc.).

You can also build credit through a secured credit card (a credit card that is backed by your checking or savings account). This is a good choice for people who have no credit or poor credit and need a credit card to build up their credit again.

2.) When making a bank account, from my understanding, go for ones that: have good interest(possibly above 3%). Also, to make sure the interest is tax free and that it can be withdrawn at any time;

Above 4.5% even. Interest on savings accounts and money markets is taxable, although there are some tax-exempt options which are best for people in higher tax brackets.

Now, I don't know what overdrawft is, so I was hoping someone with a comprehension of overdraft to elaborate a bit.

Overdraft protection gives your bank permission to dip into your savings account when your checking account doesn't have enough money to cover a transaction. I personally don't like overdraft protection because if someone steals my debit card or writes a bad check in my name, they have free reign on not just my checking but my savings too.

3.) How would you all, if given the opportunity--well, the misfortune of not having money--start if given a thousand dollars. Anything brief will be greatly appreciate.

First, open a free checking account if you don't already have one. Then if you're looking to build your credit, get a credit card (if necessary get a secured card), make some small purchases and pay off the card every month.

[lrjohnson]

Sweeps, a second on the overdraft protection. I did have my debit card information stolen (not the card, or I would have noticed). They went through a lot of money in savings after they exhausted checking. It's all resolved and I got all my money back, but I "turned off" that feature. I'm on top of my finances to not need the protection.

[Haku]

Originally Posted by Sweepsplayer

I personally don't like overdraft protection because if someone steals my debit card or writes a bad check in my name, they have free reign on not just my checking but my savings too.

Hmm! That's a really good point, so I'm going to get my overdraft protection taken off my savings account next week. Thanks!

[JBinKC]

No offense but this is an example of the failure of our education system. Very few people have any concept of money and how it all works.

I think the key of making your college experience worthwhile moneywise is the choice of field you want to eventually embark upon.

I would be very careful in the direction you take and the job you eventually choose has a low probability of being potentially outsourced. I think your best bet is choosing a profession where it is absolutely necessary to have direct contact with a person and has a current shortage in the marketplace.

There are lots of jobs today that has the potential of being outsourced to lower cost regions of the world and at the moment are not but easily can be like accounting for example.