Major Money Mistakes College Students Typically Make

To many, college feels like a free-for-all — a time when young adults can experiment with freedom but continue to enjoy the safety and security of an academic setting. Though some college students work to pay their expenses, many more rely on student loans, savings, and their parents’ money to fund their four years of university lifestyle. #personalfinance #moneytips #collegetips To many, college feels like a free-for-all — a time when young adults can experiment with freedom but continue to enjoy the safety and security of an academic setting. Though some college students work to pay their expenses, many more rely on student loans, savings, and their parents’ money to fund their four years of university lifestyle.

Unfortunately, those first four years of adulthood are more impactful on future success than many college students realize. Especially when it comes to personal finance, college years can lay the foundation of bad habits that make wealth and happiness much more difficult to obtain. Whether you are a college student or you know a college student, here are some bad money mistakes to be aware of during the next four years:

Skipping Scholarships and Financial Aid

Yes, you can get all your college-related expenses covered by student loans — but that doesn’t mean you should. Loans might feel like free money right now, but in a few years, your student loans are going to be a massive financial burden that dictates where you live, what kind of job(s) you work, and how much fun you can afford to have. If you want the rest of your young adulthood after college to be fun and rewarding, you want to limit your student loans as much as possible.

One of the best ways to reduce student loans is by pursuing scholarships and financial aid programs. There is an almost unknowable number of scholarships available through colleges and universities, local, state, and federal government agencies, and even private companies; many of these scholarships require a one-page application and can award thousands of dollars in student funding. Meanwhile, financial aid programs take many forms, from reduced tuition costs to work-study programs. Before you commit to anyone method for paying for college, you should research other potential options of income.

Abusing Credit Cards

When you are already accruing thousands of dollars of student loans, a bit more debt won’t hurt — right? Unfortunately, credit card debt is some of the worst debt you can accrue. Credit cards come with punishingly high-interest rates and low minimum payments, meaning that if you aren’t careful, you could be paying your credit card debt for far longer than your student loans. You should get in the habit of paying your credit balance in full every month — or not using your credit cards much at all.

Being Wanton With Personal Information

In college, it feels like you have to enter your full name, birth date, and social security number on a different document every day, but the truth is you should be careful to read and understand every request for any type of personal information. College kids are often targeted by scammers because they tend to lack the awareness of potential threats or the responsibility to keep their personal information safe. You should protect information that can be used to identify you — and your financial information, too — by keeping that data secret and by being aware of common scams.

Failing to Budget

Everyone needs a budget, and that is especially true of college students who tend to have high expenses and limited budgets. It is a bit easier to manage your money when you have access to personal finance software that can track your spending, automate savings and bill paying and work with you on maintaining your budget. You might ask loved ones for a money management tool for graduation if you can’t currently afford a robust service.

Ignoring Retirement

Retirement might feel like eons away, but after college, the years come faster than you think. Because retirement savings grow over time, the sooner you start adding to your retirement fund, the more money you will have available when you finally call your career quits. Even if you can use a college savings fund to pay all your expenses through university, you should consider getting a part-time job if only to help you build emergency savings and start contributing to your retirement. You can add as much as $6,000 to a Roth IRA every year, and you might as well max out those accounts while you can.

While you should take the opportunity to learn and grow during your college years, you shouldn’t allow your experience to sink your finances for life. By being aware of the pitfalls of money management in college, you can make smarter choices for your future.