For many young people, college is the first foray into adult responsibilities, including managing one’s own money and expenses. As such, college students are often prone to making certain common mistakes in how they earn, save and spend. According to a recent study of 43,000 students at over 65 universities, colleges and community colleges in over 20 states, over 35 percent of university students lack sufficient funds to feed themselves.
Meanwhile, over 40 percent of community college students have trouble affording their regular rent or utility payments.
An awareness of the common financial mistakes college students make can go a long way toward improving their financial literacy. In turn, this can help them to start adopting smarter money habits early on that can support them for the rest of their lives. Even correcting just one of these mistakes can put many more dollars in college students’ pockets which goes toward securing their financial future.
Paying Too Much for Housing
Whether living on campus in a dorm room or in an off-campus apartment, too many college students overpay for their place of residence. Many students choose living accommodations having the same features and amenities as they have at their parents’ home. Many of these amenities, however, are unnecessary and excessive for a student spending most of his or her time in class or studying. Students used to sleeping in their own room, for example, may pay extra to avoid sharing a room with a roommate.
Not Having a Budget
Creating a budget and sticking to it is one of the best ways to effectively manage your money. Unfortunately, many college students fail to take the time to set up a budget or lack the discipline to stick with one, even if they do create it. Other college students simply do not see the value in doing so or do not know how to set up a budget even if they want to.
You can devise a simple budget without much time or effort, by simply tallying up your income each month and determining how much of it you can afford to spend each day or week. Make sure to allow for savings in your budget, as you want to make sure you have money available if you lose your job unexpectedly or take planned time off during finals or the summer. Without the consciousness of a budget to adhere to, it can be easy to fritter away funds on small, spontaneous expenses, like a quick cup of coffee. Budget some money for fun and spontaneity so you do not wind up feeling stifled by your own budget and decide to scrap it.
Ignoring Free Options
Instead of paying to go to the movies, check out the free movies showing in your campus cinema. Rather than paying to go to a professional sporting event, show your school spirit and attend your teams’ home games. Instead of buying books at the bookstore, see if you can check the same or similar books out of your school or local library. You can also buy used textbooks instead of new ones and save yourself a lot of money doing so.
Resell your textbooks after using them, and you can save even more on school expenses. Start practicing spending money only on things you cannot find for free. Similarly, be aware of student discounts available for many paid products and services you need, such as museum entrance fees, airline tickets and clothing, and be sure to take advantage of them.
Having a Car on Campus
Bringing a car to school is a common error many students make believing it gives them greater freedom while in school. The fact is, a car can quickly become a great burden on campus. Chances are, you must pay for parking, including a parking pass to park on campus and another pass to park at your place of residence, not to mention parking fees to park in town or the city.
Then, there are registration, gas and maintenance expenses to concern yourself with. Beyond those planned expenses are unplanned ones like repairs and parking or traffic tickets. If you are unlucky or uncareful enough to get even just one of these, it could set you back financially for weeks or more.
Making Poor Financial Aid Choices
While financial aid can help you to afford college in the first place, there are many ways students make poor decisions about their use of financial aid that end up costing them more in the long run. The first error to avoid is not filling out the Federal Application for Student Aid. Even if you believe you have enough money to pay for college, you could still get aid from other sources, allowing you to keep more of your money in your pocket and savings for other needs later. Many students also avoid applying for scholarships believing themselves unqualified to receive the awards. You never know who else is applying for those scholarships or what criteria makes the difference in receiving one. Apply for every scholarship you can find for which you meet the basic requirements. You do not lose anything by doing so except for the time it takes to fill out and submit the application. You could well find free money headed your way for the effort.
Other financial aid gaffes students make are avoiding making loan payments while still enrolled in school. Even if loan payments defer until after graduation, interest payments may not be. For that matter, even when interest payments defer, you can still help reduce the amount you have to pay each month by starting to make payments early.
Bearing the Burden Alone
You may be starting to take responsibility for your own life in college, including financial responsibility, but that does not mean you cannot ask for help or guidance when you need it. Many students with financial troubles feel too embarrassed to share information with the ones who could help them most, like their parents or advisors. Your parents may be able to lend you money to help you out of a bind. Even when they cannot, picking their brains and using their shoulders to cry on can help reduce your stress and improve your ability to make smarter financial decisions moving forward.
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