Starting college is the first time many students experience true freedom. You can eat what you want when you want, experience new things and meet new people. One thing you don’t realize until you get your first taste of freedom is, you’re also going to have to make a lot of important financial decisions in a very short time, and it’s all uncharted territory with its fair share of risks.
Maybe you’re already in college or maybe you’re planning for your future. Either way, here are common money mistakes that first year college students make that end up costing them big and how to avoid them.
Spending more on credit cards than you can safely pay
Once you turn 18, you’re going to start getting credit card offers sent to your parents house, to your apartment, over the internet – everywhere. Having your first line of credit can feel like your first step towards financial freedom. However, with that freedom comes risk and responsibility.
One thing you need to remember is that you have to pay that money back- it’s only a loan. If you miss a payment you will be hit with high interest rates and extra fees that pile up way more quickly than you think. Not only will you end up paying back your line of credit tenfold, but you can also damage your credit score if you’re unable to pay what you owe back, which will affect your financial future.
Here are some tips to help you tread carefully:
- Don’t feel pressured to get a credit card or to spend – If you’re worried about being able to take on the responsibility of a credit card, don’t ever feel pressured to do so by offers or by friends who may be living beyond their means, stick to your debit card until you feel you’re ready to get a credit card.
- The repayment date always comes quicker than you think – Try to pay any balance on your credit card within a month, so you don’t get into a habit of just paying an ever increasing balance.
- Read the fine print – When it comes credit cards, it very easy to sign up but take your time to understand fully what you’re signing up for. Make sure that at minimum, you understand the interest and how the fees work.
There is a ton of financial aid that is unclaimed every year
Did you know that almost two million students that are eligible for financial aid each year don’t even apply and that 25% of FAFSA applications (the form used to apply for federal financial aid) go uncompleted. Even if you’re worried that you may not qualify for financial aid, its free to apply for FAFSA.
Many students also miss out on applying to scholarships because they’re worried that they may not qualify based on their grades, leaving a lot of scholarship money unclaimed each year. The reality is that there are so many scholarships, ranging from left handed scholarships to scholarships for your intended major – you’re bound to find something that a fit for you. Your future self will thank you because it will mean less student loans to pay off.
Spending your excess financial aid when you don’t need to
Did you have an excess of aid this semester? Although it’s tempting to spend your refund on a fun vacation, new video game or awesome pair of shoes- don’t. Save that money to spend on books, school supplies or any unexpected expenses. You’ll be glad you did because it will mean less loan funds that you will need to take out.
Paying full price for textbooks adds up quick
It’s easy to go to the school bookstore on campus and just have your books paid on your school account but avoid this if you can because the price of new textbooks can be stratospherically high. There are so many options when it comes to purchasing or borrowing used books. If it’s a book you’re not going to use frequently, your school library has a copy of all mandatory books available in the reference section of your on campus library. E-books can also be a great option!
You Don’t ALWAYS Have to Go Out
Just because your friends are going out to eat every night and spending a lot of money, doesn’t mean you have to. There are tons (it not most) of other students who can’t afford to do that either. Cook at home or otherwise, make sure you’re taking full advantage of your meal plan.
Also, keep an eye out for events on campus. As a college freshman there are so many free events on campus. Ice cream and pizza socials galore! Aside from the obvious plus of getting free treats, this is also a great way to meet new people and make some friends.
Not taking full advantage of student discounts
Did you know restaurants and retail shops near campus often offer student discounts or have “college night”? These deals will be your best friend! Want to take someone on a date? Look for a nearby restaurant with a discount! Need a new shirt for the football game? Look for somewhere you get a discount on school swag. Even stores like Apple and the movie theater offer student discounts! Your student ID is your ticket to savings.
Skipping class may mean paying double in the long run
Although it doesn’t seem like a big deal, missing class means you’re missing out on learning. You’re paying a lot of money to get an education and its really easy to fall behind and fail a class. You don’t get a refund if you don’t pass and you’re going to have to retake the class to save your GPA (which means you’re paying DOUBLE).
Start your college career with the tools for a bright future, and try to avoid these common mistakes that lead to unnecessary stress and debt.
For more great college tips, check out the other blogs on College Basics!