College students have always been faced with many challenging financial choices. They will need to figure out how to pay for their education, get a part-time job and earn some money on the side, and on top of all of that, they need to get a good education.
This can be tough for anyone. Without a doubt, many college students end up making some grave money mistakes. Unfortunately, these mistakes may actually cause damage that lingers for years and years. So making sure your finances are in order even as a college student can go a long way in helping you to a financially stable life after college.
1: Credit Card Debt
Credit cards are becoming a way of life. They make paying for items extremely simple and with many cards that offer rewards programs or money back it’s easy to see their appeal. The dilemma is that the allure often overshadows the drawbacks. Many cards have high interest rates, undesirable terms, and permit students to spend more cash than they actually have. Actually, if you get in the practice of simply paying the minimum payment each month you might be stuck trying to pay off the card for more than ten years!
Keep in mind that credit cards can play a very important part in establishing your own credit history, so that does not mean credit cards should be avoided. Rather, credit cards must be used to help develop a good credit history and the balance repaid in full each month. This will let you still collect the benefits or earn cash back while not having to take care of finance charges and extended repayment periods.
2: Ruining Your Credit rating
While we’re on the subject of credit cards it is important to highlight the dangers that could come with going into credit card debt. Many college students wind up completely trashing their credit history by just making a couple of poor choices. Remember, missed payments or other unwanted marks will stay on your credit history for seven decades and crap your credit rating.
Yes, seven decades! That one late payment you left back in college will be haunting you years after you graduate and are attempting to get a loan for a new automobile or purchase a house.
Don’t get careless with your finances simply because you’re in school. If you are going to utilize credit cards or other loans just make certain that you make your payments in time and do not get in over your head.
3: Not Budgeting
Does a student actually need to create a budget? You bet! In fact, this is one of the most important times to start budgeting. The problem is that students often have a restricted or even sporadic income and if you do not monitor this spending attentively it’s easy to waste money on things that you could otherwise save.
Start by developing an easy budget. It doesn’t take long, but if you have the time to examine your earnings and where you’re spending money you’ll be able to get a clearer idea of where your money is going and where you can reduce. After all, if you wind up spending more money than you have coming in you’re likely to wind up with the problems over getting into credit card debt and maybe destroying your credit score card.
4: Misusing student loans
Many students have to rely on student loans, and that’s perfectly fine. College tuition has gone up dramatically in recent decades so that it’s hard to maintain if your parents can’t help out that far. If the loans are in fact used for college expenses that’s one thing, but all too often pupils will use some of this money to get things that aren’t crucial for school.
Employing some of your student loan money to finance a spring break trip in Mexico might result in a fantastic time, but whatever you’re doing is hurting yourself by digging an even deeper hole which you’ll want to climb from after you graduate. A good deal of students assume that student loans will be simple to repay once they graduate and get a good job, but things do not always work out that way.
So, if you use your student loan cash suitably you can be sure that you’re simply taking on as much money as you need to so as to receive the instruction you want.
5: Expensive Schools
Does the name of this school on your degree really matter? Sometimes it surely does. In different circumstances, not too much. Lots of students have dreams of going to a prestigious college but this may not be the best decision financially. With a few degrees it may not matter as much where your degree comes from thus spending an additional $100,000 on this four year level may not be the best use of money.
Another option for students is to attend a state or city college for your first couple of years and then move. This allows you to save money. Before enrolling in your dream school, take some time to consider different alternatives and see if going to a local college can help you save money long term.