College students all over the country joining campus for the first time and with the high priced tuition, funds are in short supply. Even after getting great deals for their stationeries and school supplies, the main question is if they are prepared to be their own financial decision makers.
According to a 2013 study carried out by Higher One, many may not be, but the study found out that most or about 20% of college students have bought items they can’t afford and about 25% of them would be completely shocked by their spending habits.
As they adjust to their college life in the first few weeks and months, they will be at risk of making common financial mistakes. Here are the top six mishaps that a college fresher is likely to make and how they can be avoided.
1. Lack of a reasonable budget
Being in college without a reasonable budget is one big mistake. This is because without a budget, it is most likely that your money runs out before the end of the year or semester.
Also, students with budgets can also run into problems. This is because most students really don’t know the cost of things so they either miscalculate their budget did not put everything into consideration. Even if most students base their budget on the cost of attendance which affects the final results of budgeting.
Students can opt to create a budget before the opening of college and then revise it after considering their expenses for the first month. They can check on every month to make sure they are on the same track with their budget. If this has not been accomplished, they may choose to be more frugal, or find an additional source of income.
2. Charging it like it’s free
Most students are already setting themselves in debt by taking on student loans while others add credit card to the mix. This is because during the first few months in college, there are lots of opportunities to get a credit card.
The only problem is that students are likely to use their credit cards to make up for gaps in their budget. This is because most students are new to credit and their starter credit cards tend to have higher interest rates than people with better credit scores. Credit card debt can rapidly get out of control for a college starter.
Getting a credit card is a pretty cool idea as long as the fresher student doesn’t use it like its free money. Opening a credit card and using it responsibly can help you build credit. Responsible credit card use involves keeping the balance low relative to the credit limit or by paying the credit out every month. Checking on credit reports and scores can be helpful to rank yourself and to track your progress.
3. No Longer looking for grants and scholarships
College students fail in that they stop looking for and applying for scholarships. While majority of scholarships are available to high school, other hundreds of millions of dollars are targeted to college students.
College freshmen should consult their financial aid officer so that they are advised on how to get scholarships. The financial aid officer should be well updated on the latest scholarships that one can apply for. Another way to get college scholarships is to search for them online. Getting a few thousand dollars per year would greatly contribute to the student’s budget.
4. Peer pressure
In college, peer pressure takes on new dimensions that are far extended from those ones in high school. Students are freely spending money without any moderation and with this kind of independence; some students find trouble keeping up with their peers who either have much money or proper funding.
The kind of spending depends with the friends they hang around with. If they hang around with peers who drink much, buy expensive clothing and go out frequently, college freshmen are likely to face financial challenges with this kind of people.
It is important that teachers should talk to students and give advice to them on ways to handle peer pressure. Students could decide to say no by finding a part time job or by finding lower cost alternatives.
5. Failing classes
Students are likely to fail in class if they spend much time hanging out with friends rather than studying. Failing a course is a financial problem and also an academic challenge. The reason is because the student may be forced to pay extra fees to retake the course which could cost a high amount. Students should remember that it is costing them money to remain in college and therefore they should utilize their time doing positive things.
6. Working for low wage jobs
Many students are forced to work extra jobs so that they can afford college fees. This results in some of them working for low paying jobs and this eventually leaves them no money for school fees. Students can make much money if they have a flexible schedule.
For example, a student who did well in high school could offer tutoring services to local high school students at a fee. Let’s say $15-$30 per hour and this added together makes a sensible income. Students should also explore their talents so that they can also monetize them.
For students new in school, learning skills such as website design and social media marketing for small businesses could be beneficial it will generate additional income.
Avoiding these mistakes
Due to the so many temptations by freshmen to overspend, it is almost impossible to avoid these common six mistakes. Financial mistakes have a long term effect on one’s life and it is important that guardians direct their kids on how to handle money in college. Students should be given enough financial education so that they can learn about the spending pitfalls and how to avoid them. This will also help prevent mid term calls from kids in school requesting additional money