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Common Money Mistakes Most College Students Make
Ah—freedom! The long-awaited escape from childhood and into the world of being an adult. Saying goodbye to Mom and Dad and heading towards your first college dorm is a thrilling adventure. Unfortunately, being an adult brings not only freedom, but a huge amount of responsibility. Don’t screw up by making financial mistakes at the brink of adulthood.
Did you know that college students tend to rack up thousands of dollars in debt each year? And that’s not counting student loans! Student debt is even one of the leading reasons that college student drop out.
Here are some common mistakes that many college students make with their finances:
1. Not Having a Budget
A budget can be a simple thing, especially when the cost of housing is not on your list. Without it, you could easily blow through $5000 in the first month of school. To set your budget you need to break down how much spending money you have, whether it’s from your parents, your savings or a part-time job. Then ask yourself what you have to buy — such as meals, clothes, notebooks, etc.
Figure up how much those items will cost you, and give yourself some extra padding on them in case your figures are low. Now what is left? That is the amount you can spend on extra items like Friday night fun, extra clothes, and a spring break adventure. If it’s not enough, then consider ways to earn some money while in school. Even if it’s mowing grass or babysitting, things you probably did plenty of in high school, it is a source of income and can help you enjoy the fun side of college a bit more.
2. Accepting Credit Card Offers
Your parents may have provided you with a credit or debit card to cover your basic expenses, but you will also be slammed with credit card offers upon entering college. These are so tempting to use for nights out with friends, for lunch at McDonald’s every day, to impress that cute girl in Freshman Orientation, and even to head to the beach with your BFF for Spring Break.
But doing so will easily rack up thousands of dollars in debt — debt that could end up causing you to drop out of school. It’s not worth it, so don’t go there. Just walk on past them or throw them away.
3. Using Student Loans like Free Money
Many college students seem to confuse student loans with scholarships or grants — funding that doesn’t require repayment. But student loans are exactly what they say they are — loans! They carry a low interest rate and they usually don’t start accumulating interest or require payments until you have graduated, which are good things. But don’t think that means you can take them out and use them for anything you want and not face consequences.
While it may be better than credit card debt, accumulating tens of thousands of dollars of student loans will burden your post-graduate life. Keep student loans at a minimum or avoid them all together. Find alternative ways to afford your college lifestyle and tuition.
You can have a fun, rewarding and successful college experience without falling into financial disaster. You simply have to avoid the financial mistakes that your friends may be making. Being responsible financially now will also make you a better candidate for that fabulous position you want to land when you graduate.
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The college years are a time of learning, and a time for young adults to get a sampling of what it’s like to be out on their own. They are also a very expensive time for parents. By the time they pay for their children’s education, there’s often little left over to help with their living expenses.
Perhaps it’s best for college students to fend for themselves, to some degree anyway. When they’re done with their schooling, they will be out in the real world, so it’s good for them to start learning how to manage money. The college years are a prime opportunity for them to learn how to budget and live within their means before it becomes mandatory for them to do so.
As parents, we are in a position to help our children learn to manage money wisely. But many times it’s just too easy to throw them a lifeline if they have trouble. Here are some tips for teaching university students financial responsibility.
* Strongly encourage your child to do work study or get some other part-time job. While it’s important that college students have time to concentrate on their studies, it’s also important that they learn to support themselves to some extent. Even if they just work for a few hours on the weekends, it will foster good habits and help them earn some money.
* Help them find ways to save money. Encourage them to get a meal plan (and use it) instead of eating out. Find sources for inexpensive used textbooks. Point out sources for discounted clothes and other necessities. This will help them get what they need for less and show them the benefits of being frugal.
* Carefully consider whether or not to help them get a credit card. Credit cards can be very handy in emergencies, but they can also present temptation to overspend. If you feel that your child is responsible enough to use a credit card wisely, you could get a card in his name on your account or co-sign for him to get one of his own. But it’s a good idea to make sure it has a low spending limit, and to encourage your child to pay it off each month.
* Consider a prepaid card as an alternative to a regular credit card. Parents can get prepaid credit cards for their college students and reload them with their own money. If you want to help your child with expenses, you could add a certain amount to it each month or each week. And if there is an emergency, you’ll have a way to get money to your child quickly and easily.
Young adults who learn to live within their means during the college years are better equipped to make it on their own after they graduate. As parents, it’s our job to help them become more independent while helping them develop the right attitude toward spending. These tips can help achieve that.
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For college students who live on campus in a dorm, life may be relatively easy. However, many students choose to live off campus and this often increases expenses considerably. Wherever you live, here are some great tips to live frugally and still have fun:
* Living off campus means you need a way to get to class. Find a good, reliable used car. It will cost less initially and you may be able to purchase it outright. If that’s the case, you can get by with paying for insurance, maintenance, and fuel. If you choose to live on campus, you may not need transportation at all.
* Use the public library rather than purchasing books you’d like to read. This can easily save you hundreds of dollars a year, particularly if you’re a voracious reader. Many libraries also offer movies on DVD, which means you can save on movie rental charges.
* Share an off-campus apartment with friends. This will cut down on the total amount you’ll each pay when you split the cost evenly. The more people you can have comfortably living in one apartment, the less each of you will pay.
* Eating on campus is going to be cheaper than nearly anything else you can do. This is also going to be true for non-residents and non-students alike. If you’re tired of cafeteria fare, buy food at a grocery store rather than eating out. Sure, it may take you longer to get your food when you have to cook it yourself but there are so many things you can make that cost less than at a restaurant.
* If you do go out to eat, choose water rather than getting a soft drink. You can often save $1.50 or more per meal by drinking water. If you eat out four times a month, that’s $6.00 you’ll have saved, which may be enough for another meal.
* Buy and make your own coffee rather than stopping at a pricey coffee shop. Maybe your coffee won’t be as fancy, but it won’t cost $8.00 for a single cup either.
* Clothing is a necessity no matter where you live when attending college. Go to consignment stores or swap clothes with friends. Finally, be sure to either hang items of clothing you’re going to wear again or place them in a basket to be laundered. Leaving clothes on the floor could damage them which means you’ll have to replace them sooner.
* Hit sales as much as possible. This can be for food, clothing, furnishings, or whatever. If you can get it on sale you can use the money you saved for something else.
* Go to the matinee showing of the movie you want to see rather than going when you’ll pay regular price.
* Use your student ID where they offer student discounts. You may be able to save 10% or more for items you need, so why not take advantage of it?
* Purchase used text books rather than brand new ones. This could save you considerably when you add all the books you’ll need together.
Remember, when thinking of ways for college students to live frugally and still have fun, it’s a trade off. Decide what’s most important to you and then budget your money accordingly. You don’t have to forgo having a night out with friends if you save up for it by cutting back on money spent elsewhere.
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