While you are preparing for college, thought about managing your finances can be non-existent. You are too busy thinking about studying strategies, staying away from bad influences, and what courses or subjects are important for you. These preparations are not entirely bad, though you need to think on a longer term. A lot of college students have dropped out because of financial problems or debt.
It doesn’t also help that you are entering college with very few experiences regarding money. Now that you’re on your own, you are solely responsible for the financial decisions you make – good or bad. The things that you learned from school don’t help that much when you’re faced with real-life situations or events. Here are some money management mistakes you need to steer clear from when you reach college.
Getting a Credit Card
One of the first things you will see when you enter the college grounds are booths that promote credit cards. They may offer certain freebies like shirts, sodas, and other paraphernalia just to get you to sign. You might think that having a credit card while you’re in college is a good thing, but there’s a higher reason why credit card companies are targeting new students like you.
When a student who doesn’t know much about finances sign up for a credit card it results in two things. First, the student maxes out the credit card because he/she can’t control his/her spending. The second scenario would be the student signs the terms and conditions without even bothering to read it. When the time for payment comes, the student is given a shocking (and expensive) lesson about interest rates and penalties. If you noticed, in both scenarios the credit card company wins.
It’s hard to resist the urge to get a credit card while you’re still a freshman in college. A lot of new students are made to believe that it’s free money right off the bat. However you should know better. If you really want a credit card, do it before you go to college. This way you’ll know about the finer details involved like interest rates, repayment options and other technicalities. It’s also much better to sign the terms and conditions in a bank rather than a booth in school where you’re pressured or just don’t have enough time.
Poor Spending Habits
College is always seen as a time of freedom – both for the child and the parent. A lot of students thus abuse this freedom and party or spend like there’s no tomorrow. You’ll be faced with many opportunities to spend your money. You may think that it’s okay for you to spend your money during weekends at parties or in shopping malls. During the weekdays there’s still a lot of minor unnecessary spending that can add up and take a lot out of your finance.
It’s very easy to make seemingly harmless purchases that accumulate and get out of hand quickly. A common example for this is coffee and fast food. If you’re not a morning person, coffee is definitely a must-have. For your meals, fast food also seems like the logical choice since it looks cheap and is readily available 24 hours a day.
To really maximize your budget, you can always buy a coffee pot of your own. Coffee beans are cheap and you still get your daily dose of caffeine. Don’t have that much time? Just buy an electric kettle and instant coffee. It still does the trick at a cheaper price. For food expenses, you can always buy fresh fruits and vegetables and make your own meals. A lot of college dorms have shared kitchens that you can take advantage of. Just make sure that the policies about storing food are clear or followed by everyone.
Not Creating a Budget
One of the most important things you need to prepare before entering college is your budget. When you get accepted to a university or college, the next thing you think of is the tuition fees and other school expenses. What you don’t normally think of is the amount of money you need for daily expenses and how much money you need to prepare. In the end, you either bring too much (where you end up spending it all) or bring too little and struggle all throughout college.
By creating a budget, you’ll be able to control your spending habits. You already know how much you are allowed to spend for the entire week so you will have a very good idea if the purchase you are about to make is worth it or not. If you go over your intended budget for the week, then you know how much you need to adjust the following budgets. As you can see, a budget isn’t only meant for showing your parents how financially capable you are, it’s also needed to ensure you don’t have to worry about your finances and just focus on your studies.
There will always be that friend (or friends) who is in financial distress. They might try to sway you with sweet words just to lend you a few hundred dollars to get by. However, you need to consider your own situation as well. You’re not earning money while you’re still a student (or not much anyway), and if they don’t pay you back you could end up in financial distress yourself. In addition to creating financial problems for you, it’s a very easy way to lose friends.
While you’re still getting to know your friends in college, learn to say no when it comes to financial matters. You’re only looking out for yourself, and it’ll teach your friends to better budget their own money.
Not Using Free Time Wisely
In addition to being free to make your own decisions, college also has a lot of free time. This is when students commonly go on spring break or overseas trips. These can be very expensive and definitely unnecessary expenses. Instead of wasting this precious time spending your money, why not use it to earn money instead? You can apply for part-time jobs or even some internship. Not only will you earn money for your everyday expenses, you’ll also have an edge when you apply for a job after graduation.
Missing Out on Financial Aids
Most college students are oblivious to the fact that they can apply for grants or federal loans. This results in missing out on deadlines and chances to save money. There are even scholarships that are available for most of the student population, not only the students at the top of the class. Talking to your school’s finance department before or during enrollment period can help you in applying for these.
College is a very crucial time for most students out there. Beyond the weekend partying, meeting new friends, and living independently, it’s also the time when you can forge your own character. In terms of spending, there are also countless money mistakes college students can make. Knowing what these are and preparing for it can help you become more responsible and save more money in the process.