Financial decisions must be made all throughout life. As with all things in life, experience can help determine which financial choices are best as well as which ones aren’t. Here’s a look at five of the top money mistakes to avoid during college.
#1: Racking Up Debt on Credit Cards
Credit card debt isn’t always a bad thing. In fact, for a college student looking to build his or her credit, a minimal amount of credit card debt can be of the utmost advantage. However, when this type of debt increases to an amount in which it can’t be paid back quickly, this can actually lead to a lower credit score because the balance on the cards will stay high. Instead of racking up high amounts of debt on credit cards, the smartest decision is to never go over the 30% credit line threshold as this will make it easier to pay down the balances quickly.
#2: Avoiding a Budget
If you don’t make a budget to stick to, how can you expect to have a clear idea of what your financial situation looks like? You can’t–and that’s exactly why college students should always create a budget. Ideally, this budget will account for all expenses, including cell phone costs, dining and entertainment, transportation expenses, etc. The clearer the picture you have of your finances in college, the easier it will be to gain deep insight into the do’s and dont’s of your money choices once you graduate.
#3: Purchasing New as Opposed to Used
When it comes to textbooks, a computer, tablets, and many other items that go hand-in-hand with college, you will want to consider buying used instead of new. This can save you hundreds, possibly thousands, of dollars each year on these types of expenses. You can find cost-saving deals on these items both online and at local tech stores. Most colleges also have a nearby used textbook store where you can buy used books.
#4 Assuming Employment is Guaranteed
Many students accumulate debt in college and think they can pay it off shortly after graduating. They assume they will have a job, but employment isn’t always guaranteed as it can be difficult to find a specific job in some fields. For those who don’t get a job as quickly as they hoped, the debt often starts piling up due to interest.
#5: Being Disorganized
If you’re disorganized when searching for scholarships and grants to apply for, this can lead to missing out on thousands of dollars in financial assistance for your college tuition, textbook, and boarding expenses. To stay organized make sure to check with your advisors as well as online for the latest deadlines and application requirements for any scholarships and grants available to you.
By avoiding these money mistakes in college, you’ll be able to remain more financially sound after graduation. Find out more about how Mercer Savings Bank‘s products can help college students stay on the right financial path by contacting us today.