Too many young people get to practice their first money management skills in college. However, college students tend to be at risk for making financial mistakes. Many are inadequately prepared for handling their own finances. And one of the main reasons why students drop out of college is because of finances, that is, poor financial management.
Here are six financial mistakes college students make all the time and how these mistakes can be avoided.
Not creating a reasonable financial plan
Going to college without having a budget plan is like going to combat without training. It’s like not preparing for college at all. Students who forget such important thing are at risk for running out of money even before the semester ends.
Students who do not prepare for college expenses tend to be surprised at how fast their money goes out. Creating a budget plan is crucial especially before college starts so as they can keep track of all their expenses and can revise such budget later on. They can cut back a few dollars here and there if they are spending too much, find another source of income to help their finances, and can even save some money later on.
Missing out on scholarships and financial aids
Many college students tend to overlook this. Not looking for scholarships and financial aids can add cost to one’s college finances. Various college scholarships out there are not only available to freshmen and students at the top of the class. Many are actually available to students with different abilities basing on a wide range of criteria. It’s crucial to ask for financial aid from their institution. Check professional organizations of one’s choice to see if they offer scholarships.
Giving in and abusing credit
Mismanaging credit card among college students is a typical scenario. These college students tend to find themselves in a never-ending cycle of debt.
Getting a credit card isn’t such a bad idea. But it can pretty much be a liability if students are using it like it’s “free money”. Students tend to use credit card to make up for budget gaps that eventually lead to an out-of-control spending. Using credit card comes the understanding that it involves credit management habits. Knowing how to manage credit score will ultimately affect their future financial situation. Low credit score can mean paying more for mortgages, auto insurance quotes comparison online and loans among many others.
Forgetting to take advantage of free and low-cost tools
Neglecting great benefits in one’s college experience is a common mistake among students. Utilizing all the free library resources, attending free lectures, workshops and events, signing up for organizations and getting advice from academes and career services in college can be a big help in maximizing one’s college experience. Take advantage of the resources available at the campus. It’s a huge help to one’s personal and financial needs.
And in this time where everything happens so fast and “there’s an app for that” era, there are tons of available apps, tools and websites to help students do pretty much everything they need to do; and managing finances is not an exception. Great tools are out there to help achieve whatever objective it is.
Not keeping a budget
Not knowing where one’s money is going can be a huge financial setback. Being lured by peer pressure is one of the major reasons why unnecessary spending happens. Most students get into trouble by trying to keep up with peers who have more money or who are more financially capable. Eating out often, weekend getaway, drinking and buying expensive clothes are some of the uncalled expenses that can quickly add up and create financial trouble.
Keeping track of all the expenses and sticking to the monthly budget as strictly as possible is crucial in order to avoid money problems. Know when to spend and what to spend on.
Choosing an expensive college
Unfortunately, choosing an expensive college can be the major deal breaker on student finances. General education courses are offered at community colleges and online colleges at a fraction of a cost in an expensive college. Choosing the right school can save thousands that can be used for other requirements. For instance, living at an urban college is much more expensive than that of a college in a rural area. It may not be the ideal situation, but it will save money and help not acquire debt. Such will ensure of you independence from debt after graduation. So, choose wisely.
Financial mistakes, in the long run, add up to many financial problems that continue even after college. Practicing basic money management technique among college students is imperative. Managing finances well can add up to the student’s confidence and good financial habits eventually. Wise decisions will always benefit you in the future.