Being a student is exciting but also challenging financially. Your books, housing, meals and supplies will cost money. Many take out big loans but still struggle to cover all bills. It isn’t accessible if you want to stretch money from part-time campus jobs or summer work.
Without experience handling money, students often make financing mistakes:
- Spending more than earned each month
- Using credit cards recklessly
- Not budgeting or tracking where cash goes
- Failing to start savings funds
These errors are common but can hurt for years. Missed payments lead to poor credit ratings, and high-interest debt from splurges requires a lot of future income to repay. Financial burdens harm mental health, relationships, and academic focus. With some caution and discipline, students can prevent money issues.
Lack of Budgeting
Students often spend too much because they don’t budget. With no plan for expenses, it’s easy to swipe cards without thinking. Then you don’t have enough cash. Avoid this money mistake by:
- Write down everything you spend, even small stuff like coffee or snacks. You can use an app to track expenses.
- Split expenses into needs and wants, such as housing, food, and transport, which you must pay for, and fun stuff, like dining out or movies, which is extra. This shows your spending habits.
- Make a budget based on real income and set monthly limits for each category. Tweak as needed, but try to stay within these limits.
Having a written budget is essential. Tracking every purchase builds good money habits. Monitoring expenses and setting limits helps avoid overspending and running out of money. A little planning goes a long way towards being responsible with money.
Excessive Use of Credit Cards
Students often misuse credit cards and end up in debt. It’s easy to swipe now and pay later. But credit card interest and fees add up quickly. Avoid this money mistake by:
- Only use cards for real emergencies or planned big purchases.
- Pay the full bill monthly, if possible, and avoid making the minimum payment due.
- Have only 1 or 2 cards, as applying for lots looks bad on credit reports.
- Make a budget and stick to it.
Cards seem easy and convenient. But reckless use leads to bad credit ratings later and expensive interest payments that never end. Use debit cards or cash instead whenever you can. Only take on credit card debt you can realistically pay off fully in the near future.
Ignoring Student Loans
Not paying back student loans can hurt your finances and credit rating. Getting high-interest loans with a cosigner to pay for college seems easy when the loan money first arrives. But those monthly payments can quickly become very tough to handle.
It’s critical to fully understand repayment terms and interest rates upfront before borrowing money for education. Loan servicers typically aren’t very flexible on due dates for payments. If you have very bad credit loans with no guarantor from a direct lender with your father, you will have the loan on time. If you skip even one monthly payment can badly damage your credit report, as well as your cosigner’s credit.
Your missed payments lead to low scores, and poor credit makes everything more expensive later on – auto loans, home loans, and insurance premiums cost more when you have bad credit.
It’s essential to make student loan payments a top budget priority every month. Even when cash is limited, it’s essential to contact the loan servicer right away and ask about any options available.
Not Building an Emergency Fund
Many students spend all they earn monthly and no cash is set aside for surprise bills. So, problems hit hard:
- Car breaks down
- Jobs cut hours
- Bikes get stolen
You can’t pay for shocks without savings there, so you will be forced to use high-interest credit cards or loans when bad luck strikes:
- Rate hikes kick in
- Debt piles up
- Stress takes over
Guard against budget emergencies sneaking up by:
- Open savings account
- Put in small regular amounts
- Even $20 a week works
- Cut back expenses where possible
- Save expected periodic costs, too
No cash buffer means any mishap leads to credit card balances and money stress. So, put a bit away from each check and put it into emergency savings. You can avoid bigger issues down the road.
Spending on Non-Essentials
It’s tempting to indulge in fancy restaurant meals, expensive gadgets, and weekend getaways when credit cards or student loans provide the cash. But putting this kind of extras ahead of real needs is a budgeting mistake.
Making wants more important than needs frequently leads students into financial trouble:
- Your credit card balances balloon, yet minimum payments only cover a little interest.
- Money for basic living costs gets tighter each month to help pay for lifestyle extras.
- Your grades will suffer as too much partying and travel cut into study time. Your academic issues limit your chances for good internships and jobs after finishing school.
Before every optional purchase, pause and think—is this a short-term want or an ongoing basic need? You can limit dining out and entertainment extras to affordable amounts that don’t risk paying rent or tuition. The occasional treat is fine, but being comfortable financially over the long term requires spending discipline to fund needs before wants.
Failing to Take Advantage of Student Discounts
Students can save a lot if they are aware of the many discounts available to them. However, some don’t look into possible savings and overpaying. Avoid leaving this free money on the table.
Things like software, insurance, travel, dining, electronics and even loans for 19-year-olds often offer special rates, avail them. Search online for “student coupons” as well when shopping. Small monthly savings add up over time, easing tight budgets from loans paying tuition.
Just showing a student ID when buying fast food or rideshare trips helps. You don’t have to assume places to apply a student’s price.
You can do some quick research about possible deals targeting students wherever spending money – dining, events, entertainment, banking, cell phone plans etc. A few minutes to find ways to save goes a long way during school years and early tight incomes. Discounts provide financial relief if you take the time to find them.
Conclusion
If you stay aware of expenses, live below income levels, and use credit judiciously, you can prevent painful shortfalls. Your finances need self-control but enable reaching goals later, like home ownership, starting a business, or retirement investing. You can establish responsible money habits now, which leads to financial freedom in the years ahead.
The college budget may always feel stretched thin, but it is excellent practice for times to come. So stay focused on your dreams, use a wise savings plan, and use the available discounts. Financial success will build over time.