When I thought about writing about the top mistakes that college students make, I turned to my Twitter and Facebook networks. Not surprisingly, many people had similar negative experiences with money. Here are the top 5 money mistakes we came up with:
#1 Not creating a spending plan.
Know the fastest way to clear out a college party? Say the word, “budget”. Most college students see budgets as soul-killing exercises in futility. After all, who really sticks to a budget anyway? The biggest mistake college students make is not creating a written plan for spending money. It doesn’t have to be as scary as it sounds. You can create a spending plan in seven easy steps.
Many students work part-time jobs, get grants and scholarships, as well as take out student loans. Students are constantly looking for sources of income while rarely coming up with a plan to spend it. How many of us, yes I said, “us”, have found ourselves overjoyed with our financial situation at the beginning of the semester only to be confused as to where all the money went by midterms? Create a spending plan and stick to it.
#2 Taking out too many loans.
One of the topics that came up over and over again was the topic of student loans. People mentioned that there weren’t sure how much money in loans they needed to take out or that sometimes they took out as much as they could forgetting that loans have to be paid back with interest. Now that student loans are back to being administered directly from the US government, it’ll help students reduce the amount of interest they’ll have to pay back, but it’s up to each student to only take out as much money as is necessary to cover college expenses.
#3 Opening credit card accounts.
This used to be the biggest challenge college students faced. Credit card companies would set up shop on college campuses and offer cards to people with little-to-no income and no idea of what they were getting into. All that’s changed with the CARD Act. College students will no longer be offered credit cards and those that apply will have to prove sufficient income to pay off the debt or have a co-signer. It looks like the most common problem college students have may have gone the way of the dinosaur.
#4 Buying new books.
There are a few different strategies on buying text books: buy new, buy used, rent, don’t buy any. Books are usually purchased at the start of the semester so few students have problems purchasing them. The challenge usually comes at the end of the semester when it’s time to sell the textbooks back to the bookstores. You see, textbooks will usually sell for between 40% and 60% of what you purchased them for. Use a textbook website to compare prices for new, used, and rented textbooks. All you need is the ISBN number and you’re on your way to making a small choice that may save you hundreds.
#5 Not networking for a purpose.
I’m guessing that you’re going to college, at least partly, because you want to earn a good living in your chosen profession. You’re going to classes, studying hard, and imagining what you’re life will be like in a few years. The key piece that too many students don’t consider is: networking for a purpose. Make sure to join clubs on campus involved in your field, volunteer for projects, both on and off campus, that will build skills necessary in your field, and network with professionals in the field by attending meetings for chambers of commerce. Most professional organizations offer a discount rate to students. By networking while in school you’ll build skills, networks, and confidence as a professional and all that experience and confidence means more income.