Common financial mistakes of students
Read on and find out the 5 most common financial mistakes of students, and avoid them so you don't stay poor.
by Danilo Pereira
College is a rich and exciting period, but ignoring your finances could have a cost in the long term
Generally, we do not expect students to have everything figured out. But there are common financial mistakes of students that you can avoid right away.
For most people, college can be an amazing period of growth and self-discovery. It is also a very social environment filled with opportunities for meeting new and interesting people.
It is also the period when most people start getting their first part-time jobs, their first bank accounts, their first credit cards, and even getting offers for financial aid.
With the right knowledge, these can be powerful tools that will provide you with the peace of mind you will need to focus on your studies.
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However, if you misuse them, it may come back to bite you both in the short and long term.
And the truth of the matter is that many young adults develop extremely poor money management habits in college. They are like any habit: sticky and hard to get rid of.
It is not uncommon for students to max out their cards, forget to pay the balance on time, and even forget to save a portion of their income.
As boring as it may sound, understanding where you stand financially helps you get a much clearer picture of how to achieve what you would like to achieve.
The earlier you establish good financial habits, the better your relationship with money will be.
So it is well worth looking into some of the most common financial mistakes of college students so that you can avoid committing them yourself.
1. Not applying for Financial Aid
Student financial aids come in the form of work-study programs, grands and federal loans. If you do not take advantage of those, you are most likely missing out on a great opportunity.
So, to avoid this common financial mistake of students, make a good research about your financial aid options.
College expenses can be draining both on you and on your family. To help ease that burden, take time to fill out an application for a Federal Student Aid (FAFSA).
Other organizations such as UniScholarz and Unicreds give access to student financial aid with a very simplified process.
With UniScholarz you have a platform that allows you to find extremely popular scholarship programmes around the world.
The platform is free to sign up and it makes it possible for students to find the best scholarships which match their academic profile.
You can find scholarship programs to study abroad in countries such as the USA, the UK, Canada, Australia, Spain, Ireland, France, and many others.
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2. Not keeping track of your spending
One very common problem students face is not knowing where their money goes. This common financial mistake of students can lead to debt.
The truth is that debit cards and credit cards end up making you spend more because you hardly ever look at the numbers.
Yes, figuring out where your money goes can be a bit of a hassle. But this practice has long been widely recognized as extremely useful even by the most experienced finance professionals.
If just thinking about the word “budgeting” sends shivers down your spine, find yourself a tool you can use to help you do that the most seemingless way possible.
There are a number of budgeting apps you can use to keep track of your spending in all areas of your life.
You could even use little notes on a calendar, whether a paper one or the one on your smartphone.
After tracking your spending for at least 2 weeks you will get a much clearer picture of where your money is going toward.
3. Not differentiating wants from needs is a common financial mistake
You do not need to be a student to suffer from this.
In fact, when you think about how consumption-driven the world economy is, it is of little surprise that individuals fall prey to their unlimited wants while mistaking them for needs.
We are constantly bombarded day and night on social media and on TV with enticing offers of products that seem to be everything we have been looking for, even if we have not.
And research shows that we are actually more likely to buy things we do not need online than at a physical store. Do not get caught up in this consumption spiral.
Whenever you find yourself close to making an impulsive purchase, take a deep breath, and let the offer go for a few days.
While you take your time, ask yourself if this product will actually make your life any easier.
How much value will this product add to your life? How much are you actually going to use this product?
Questions like these and many others you can ask will help you make a much more thought through decision, and you find yourself buying impulsively much less often.
4. Misusing credit cards
There are numerous stories of people who did a terrible job managing their credit card expenditures and ended up buried in credit card debt under tons of interest.
Some people get traumatized to the point of completely eliminating credit card usage from their lives once they have paid their balance. Not only is that unnecessary, but it is also unwise.
Making good use of credit cards can help you build your credit score, not to mention help you meet costs.
First, make sure you have an appropriate income that allows you to pay off your balance. Second, always pay off your balance on time and in full.
If you are in debt, make sure you repay that as soon as possible. Carrying debt on a credit card can significantly damage your finances and your credit score.
5. Not becoming more financially literate
As boring as it may sound to some, learning the basics of personal finance is vital for anyone’s financial wellbeing.
It is one thing learning how to make money. It is another thing learning how to take care of what you have earned.
Learning about it does not have to be painful either. Listen to podcasts about personal finance on your way to work or school. That on its own is going to give you a number of insights.
Hopefully those insights will inspire you to search for more information, and off you go from there.
Student Loan: Should you apply for it?
When it comes to finances, most students will face the decision to apply or not for a student loan.
Unfortunately, paying for college can be quite expensive. And if you can not afford it, you can apply for a private loan or a federal loan.
If you’d like to learn more about this relevant topic, read the following article we’ve made about it.
What is a student loan and how do they work?
In this comprehensive guide, you’ll learn about the different types of student loans available, how to qualify for them, and what you need to know before you borrow.
About the author / Danilo Pereira
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