There’s something about going “cash only” that feels like a siren’s song to most people. Students aren’t exempt form it either. If you ask any students these days, they’ll tell you that they’re really considering going cash only. They don’t think that they should be messing around with credit so early. They think that it’s something better delayed when they feel a lot more responsible. The reality is that we can’t just sit back and wait for the right moment. The earlier that you build your credit and start saving money, the better financial future you’ll be able to build. That’s not to say that you have to walk around with five credit cards and a car loan. We’re not trying to tell you to take on so much debt that you can’t even see straight. But as a student, there is a time and a place to add credit to your life. If you’re in a small emergency, it’s money that you can pull on when it’s time to go home, or to change your life in a different direction. The reality about credit is this: like money, it brings options. In the future you might want things that your current self absolutely doesn’t want.
A house is a big time credit expense. You have to get a home loan in many cases. Unless you’re independently wealthy, you’re going to need to make sure that you have the means to get the loan. This is done through getting small lines of credit and working your way up.
Going cash only, therefore, is a waste of time because it really doesn’t get you anywhere. You just end up spinning your wheels, feeling locked out of things for a while. Some argue that going cash only is the only way that they remain disciplined. We don’t buy into that view of humanity. The reality is that there are plenty of people that manage to have good credit and good budgets. It’s all about setting limits for yourself and not getting caught up in the materialistic games that other people play. In college, it can be hard not to just slide into the crowd and purchase things that others are purchasing. But you’ll feel so much better about yourself if you can just focus on the things that matter to you. Sure, other people have goals that are equally important, but since they aren’t your goals there’s no need to stay up at night worrying about them. At the end of the day, the only thing that you can really do is take care of yourself and your dreams.
Please consider starting your credit file early. Little lines of credit may add up to a lot more than you think over time. However, just going wild with credit isn’t the answer either. If you know that you don’t make that much while you’re at University, one credit card is fine. One loan is fine. You don’t have to have 5 loans going on at once time. That just wouldn’t make sense at all. You want to get something that you can handle, and then go from there. Paying on time will build your credit history. You don’t have to charge that much, either. 25% of the card or less is all you really need. Anything more and lenders start worrying that you’re racking up a lot of debt that you don’t intend to pay for. Speaking of levels, you might be surprised at how fast your credit limits increase once lenders realize how dependable you are.
Check it all out for yourself, while it’s still on your mind!