While many high school graduates are excited to be going off to college for the first time, with this newfound freedom comes huge financial responsibilities. Since you will finally be living on your own and trying to enhance your personal finance skills, the lessons you learn and the mistakes you make could impact you for the rest of your life. Be smart with your money and avoid making these mistakes:
Accumulating Credit Card Debt
Be very careful when using your credit card. While many credit cards offer cash back programs or rewards, they also have high interest rates. Students often spend more money than they have and get into the habit of only paying the amount, only to find out that they could be paying off the same credit card for the next decade.
However, credit cards to help you to build up your credit score, so do not avoid them altogether. Consider having one credit card for this purpose, but make sure you pay the balance off completely every month. You will still receive the benefits such as rewards and cash back, but you will not have to deal with paying the balance over the next few years.
Destroying Your Credit Score
Maintaining a good credit history will affect you years down the road. A simple mistake in your college years such as missing a payment or another negative mark will be on your credit score for seven years. If you are planning to purchase a home or finance a car after you graduate from college, be careful not to let too many stupid mistakes trash your credit score.
However, everyone makes mistakes, especially in college. Just remember that these errors will cost you for years after you graduate. Monitor the credit cards that you have and make sure you do not have more than you can handle. As long as you pay the balance, you will build your credit score up without further complications.
Failing to Budget Properly
College students need to save their money just as much as a family or a single parent would. During college years, most students do not have to worry about paying mortgages, feeding children or buying life insurance. However, this is the time when most students become lazy about their finances, especially if they do not have a steady job or a budgeting plan in place.
To avoid getting in over your head in credit card debt and ruining your credit score, plan a simple budget for your lifestyle. Look at your income and track your expenses to see where your money goes. If it is obvious that you are spending more than you are bringing in, figure out what areas you could cut back on. If you are renting an apartment and pay a cable television bill, do you really need the complete sports and movie packages? Could you ride your bike to school instead of paying for a bus ticket or gas? Brainstorm a list of ways you can cut back expenses.
Misusing Student Loan Money
With the unstable economy, more students are turning to student loans to finance their educations, especially if they are paying for it themselves. While some students do, in fact, use their loans for their education, others take the money and spend it on things that are not related to school. For instance, if you and your roommates want to take a trip to Hawaii for spring break, you can use your student loan money. After all, the school cannot completely monitor how you spent your money.
However, be careful because you may dig yourself a hole that you cannot climb out of after you graduate. Many students assume that they will be able to get a good job right after they graduate and they will be able to pay the loan off easily and quickly. However, especially with the current unemployment rates, most college students are finding it harder than ever to receive a job offer directly out of school. To make your life easier after you graduate, only take enough money necessary to fund your education, and make sure you will be able to pay it back.
Choosing an Expensive School
For some professions, having a prestigious alma mater can make or break a job offer. For others, the name does not really matter, as long as the student has a college diploma; you do not need to pay an extra $100,000 just for the name of the school. You may also have high dreams of traveling across the country, but remember that out-of-state tuitions are more costly than in-state tuitions.
More students are turning to community colleges or relatively inexpensive schools for the first two years and then transferring to finish out at a well-recognized institution. Saving your money while you earn your Associate’s degree will allow you to pay to complete your degree. Consider other options before you enroll in a prestigious college, and see if your dream profession really requires a high-class degree.
Mallory Hall is a married mother of two blogging on family, financial and health topics. Visit her at Guru to if you'd like her to write for you.