Being a college or university student is a stressful time. The transition from high school to college or college to university is a big one and many students find it difficult to manage their money, especially when they are becoming financially dependent for the first time. Here are some money mistakes that students should avoid.
The first mistake you should avoid as a student is not budgeting! Research shows that 43% of students don’t track their spending or budget correctly for the academic year. Which can lead to overspending and debt. The best way to avoid this mistake is to divide your money up equally, so you know how much you have for the month or week to spend. There’s nothing wrong with treating yourself to nice things or going out with your new friends, but you should monitor your spending and wait to buy things if you’ve already spent your money limit for the week or month.
You might be experiencing financial freedom for the first time and the moment your student finance goes into your bank account, you will be tempted to spend. From clothes shopping to daily coffee from Starbucks to countless drinks at student social events, it can be hard to resist the impulsive urge to spend it all. We convince ourselves that we need things and buy them without giving it a second thought. The best advice, if you are an impulsive person, is to ask yourself if it’s something you want or need.
Having a credit card
Credit cards are becoming increasingly popular with students. It’s a great way to buy things that you need and pay for them later. But if you’re not careful, credit cards can be misused and leave you in a tricky financial situation. Before you think of getting a credit card as a student, you need to understand the responsibility that comes with it. The best advice for credit cards is to only get one if you feel you need it and when you do get one, use it for emergencies only. Another great alternative is to get a bank overdraft.
Not having a safety net
Having no emergency fund or overdraft is another mistake that students can make. As a student, you will have a lot of expenses and sometimes things happen and you don’t have enough money to cover them. You can’t always rely on a parent or family member to bail you out if you get into trouble. Have an emergency fund of money and when you have saved up enough, you can dip into it and treat yourself. Having an emergency fund of savings will give you the financial freedom to spend, knowing you have money there to fall back on.
Not tracking your money
Another mistake students make is not tracking their money. You will get halfway through the semester and realize you don’t have enough money left to stretch until your next semester.
You can do everything with a smartphone now, including tracking your money and spending. There are loads of helpful apps that keep you in the know about your finances. Some of them even enable notifications, so you can be alerted when you spend too much money.
Giving yourself a bad credit score
It might not seem important when you are young to have a good credit score. But mistakes you make now might follow you later on in life when you are trying to get a loan or a mortgage. Many students end up with bad credit scores because they don’t repay their loans on time or they miss regular payments. Keeping track of your bills and payments is one of the best ways to keep a good credit score but there are many other ways you can improve your credit score, there are multiple websites and apps that provide that service.