What are 5 common financial mistakes students make?
By Amanda Draper, National Content Director at NextGenVest
While budgeting, planning for your future and becoming financially literate, can seem daunting and nerve wracking, doing these things is extremely important, because the financial decisions you make now will have an impact your future for years to come. Therefore, it is important that you begin to take steps now to make smart financial decisions, so you can put yourself on the path to doing whatever sets your soul on fire, without having to agonize over your past financial mistakes. Here are five ways you can avoid making common financial mistakes, and put yourself on a good path to making informed decisions about your money and future.
1. Credit Card Debt
Credit cards have become a part of our daily lives, they make paying for things extremely easy, especially because you can buy now and pay later. The attractiveness of credit cards is made even greater with so many cards offering cash back and other rewards programs as a way to entice you to sign up for a credit card. While the appeal of these rewards distract us from the fact that many cards have extremely high interest rates, have terms that favor credit cards companies. And the buy now, pay later mentality can allow you to spend more than you actually have. And if you if you routinely only making the minimum payment on your credit card each month, you will be forced to pay additional interest and and you could be stuck paying off a credit card for many years to come.
However, it is important to remember that credit cards are extremely important for establishing your credit history, which means you should not completely avoid credit cards. Instead, you should use credit cards responsibly, only spending as much as you can pay back, so you can pay your balance in full each month and build a solid credit history. If you use credit cards responsibly you will be able to earn rewards and cash back without being stuck with being stuck with paying off your credit cards for years.
2. Relying too much on student loans
Another common mistake that students make is relying too much on student loans. You should only borrow as much as you need to pay for the necessities. If you can, it’s recommended that you begin to make payments on your loans while you are still in school, because the earlier you begin to repay your loans the better. Even if you are only paying $25 a month towards your student loans, you can reduce that amount you interest you accrue with your student loans while you’re in school. If you can reduce the amount of accrued interest on your loans, you will reduce the overall cost of your loans.
3. Not creating a budget
Another common mistake that students make is not creating and sticking to a realistic budget. Setting up a realistic budget, sticking with this budget, and keeping track of where all of your money is going, is one of the easiest ways you can put yourself on the path to making smart financial decisions. For a detailed guide to creating a budget, check out The College Student's Guide to Budgeting. And Money Mentors can also help with budgeting.
4. Not taking advantage of all of the free stuff and discounts available for students
One of the best benefits about being in college is your student status and how that opens so many doors for receiving discounts, and free stuff, as well as how as a student you are able to participate in so free and low cost activities sponsored by your college happening on and off campus. In general, you should avoid paying for items or services that you can get for free, and you should be on the lookout for what’s happening on campus, along with what discounts and special offers that are available to students. You should whenever possible take advantage of these opportunities, since student status will not last forever.
5. Failing to exhaust every scholarship option
Another common mistake students make is not exhausting every scholarship opportunity. Scholarships are important and incredibly helpful, since you are not responsible for paying them back, so they are essentially free money you can put towards your school costs and/or other expenses. In failing to extensively research scholarships opportunities, you are missing out many opportunities to reduce your cost of attending school. If you want help finding scholarships, a Money Mentor can help you with researching scholarships, Money Mentors will talk with you about your unique interests and needs, and research scholarships for you. They will send you curated a list of the scholarships, that are best suited for your unique interests and needs that you can apply for. And Money Mentors will even help you apply for these scholarships.