College is a time when students are faced with new challenges in the world and may not have much experience dealing with money. This can lead to mistakes that can cost them thousands of dollars down the road! When you are in your early twenties, it is hard to remember all of the ins and outs of credit card interest rates, late fees, bank overdrafts, etc. However, college students make some common mistakes with their money, and knowing about them can help one avoid them. This blog will take you through a list of common money mistakes made by college students.
POOR FINANCIAL PLANNING
It is easy to get caught up in the moment and forget about planning for the future when you are a college student. Saving money now can help you down the line as an adult when you need it most. Even if you only save a little each month, this will add up over time! Make sure that you plan for big purchases and your retirement as a college student.
NOT HAVING A BUDGET
Many people graduate from high school without ever really learning how to manage their money or budget, so they don't have one in college. When there is no limit on your spending each month, it is easy to go out to eat every day, buy new clothes, and take trips on the weekend. However, it can cost hundreds or thousands of dollars each month! Therefore, college students must learn how to stick within a budget.
SPENDING MORE THAN YOU MAKE
Not knowing when to say "no" can be a big mistake in college. Many students rely on loans and bursaries to get through school, but they will have even less money once they finish college. So make sure that you have a healthy amount of savings built up before you finish school to avoid living paycheck to paycheck!
NOT HAVING AN EMERGENCY FUND
Having some set aside for emergencies is critical. Even if you are a responsible spender and budget your money, bad things can still happen. For example, you could get in a car accident or suddenly need expensive medical treatment; either way, you would be out of luck if you lacked an emergency fund to cover such expenses. Not having an emergency fund is one of college students' biggest mistakes with their money.
CREDIT CARD MISUSE
Many students have a credit card when they start college. While it is nice to have one in case of an emergency, if you are not careful, you can add to your debt instead of helping pay for unexpected expenses with a credit card. If you only carry a balance on your credit card from time to time and keep your spending in check, you can actually benefit from using a credit card. Using your debit card for everything is a big mistake college students make with their money.
NOT HAVING THE RIGHT INSURANCE
Whether it is health, life, or car insurance, not having the right coverage when you need it most is a grave mistake that could lead to financial disaster! If something unexpected happens to you, you will wish that you had the right insurance. Make sure to look into what coverage you need and get it before anything goes wrong!
MISUSING A STUDENT LOAN
Just because you can borrow a bunch of money for your education doesn't mean it is a good idea. It is essential to ensure that the debt load you take on as a college student will not inhibit you from preparing yourself financially as an adult after graduation. Ideally, college students should graduate with little or no debt.
NOT GETTING THE OPTIMUM VALUE OUT OF YOUR EDUCATION
Studying hard in college will get you a career, but if you miss out on internships and positions in the field you want, you will have a disadvantage when it comes to earning a living in your future. So make sure that your education is worth every dollar you spend on it by getting the most out of your time in college!
NOT USING ANY FINANCIAL AID
Many students could qualify for financial aid but do not even bother to apply. The earlier you are accepted into a school, the more aid you can receive. This is money that doesn't have to be paid back, so make sure to take advantage of it! Also, don't take for granted the scholarship opportunities that are out there.
NOT JOINING A CREDIT UNION OR NOT SIGNING UP FOR DIRECT DEPOSIT
When you sign up for a direct deposit, your employer can automatically transfer money into your bank account each time they give you a paycheque. This will help you save more money by not touching the funds meant for bills, groceries, and other things! Also, joining a credit union is an excellent way of saving money because you get better rates on loans.
ACCUMULATING DEBT
It is easy to get carried away and spend more than you can afford when you get a loan. This is a huge mistake that college students make! If you do get any loan, be sure that you will have the means to pay it back before you take it on.
NOT HAVING A SAVINGS ACCOUNT
It may be wise to keep some of your money in a high-yield savings account rather than have it all tied up in checking. You can't get that kind of interest from a bank, so look into opening an online account and start saving up for the future!
NOT USING COUPONS OR PRICE MATCHING
If you like to shop at certain stores, make sure that you know their policies on coupons and can take advantage of them. Also, watch for sales and use the store's competitor's ads to your benefit! It will give you a better deal for groceries and other things that you need to buy.
Money management is a skill that college students must learn to prepare themselves for the real world. Unfortunately, it is often tempting to do things that could jeopardize your financial future as a college student. It is best to avoid these mistakes and learn from what other people have done in the past! When you are a student, you have a lot going for you, so don't let any of these mistakes ruin it—being financially responsible while in college can help you avoid problems later on.
