At any college campus, you’ll likely see students with hunched shoulders from the weight of textbook-heavy backpacks. However, what you can’t see is the ball and chain they’re dragging after them— student loan debt. According to Ohio State News, 70% of college students suffer from financial stress as student loans continue to grow. Making tuition payments on time hangs heavy over the heads of students struggling to pay day-to-day expenses and other bills.
Financial stress is unhealthy for college students— it can lead to lack of sleep, depression, and lower grades. For first-year students, in particular, financial stress can lead to doubt, discouragement, and potentially even dropping out. College newbies often underestimate the financial responsibility that goes hand in hand with higher education, engaging in irresponsible spending patterns potentially resulting in life-long debt.
So what can help mitigate these money miseries? The first step is financial literacy. Understanding income, budgeting, investing, and saving is vital to a college student’s fiscal future. Informed decisions are smarter decisions— and financial skills don’t have to come with a diploma. Here are some quick tips on money mishaps to avoid in the first year of college.
Using and abusing credit
At first glance, credit can seem like free money, which is why some unassuming college students get themselves into trouble after signing off on their first card. What are the warning signs of bank card abuse? First and foremost, missing payments is a massive indicator. Late installments can remain on your credit report for seven years— and as interest compounds, things only get worse.
Additionally, first generations students, credit newbies, and compounded loans are all signs of card abuse. However, with good money management, a credit card can be a huge boon. Students with minimal credit history can still sign on to a credit agreement, like those from 1st Financial Bank USA, that offer fewer fees, exceptional cash-back rewards, and lenient grace periods.
Getting a card during your college years allows you to build a solid credit history for post-graduation. Plus, you can prepare for emergency expenses instead of paying out-of-pocket, potentially setting you back on day-to-day expenses.
Shutting your eyes and swiping without a thorough understanding of how your purchases will impact your bank account is never a good idea. Instead, set aside specific amounts of money for basic needs, like tuition, gas, and entertainment. Budgets may seem intimidating, so first, begin by keeping track of your current purchasing. That way, you can see how your finances play out over a month and plan accordingly.
Not taking advantage of freebies
Colleges provide students with hoards of free entertainment on and off-campus. Scour bulletin boards for fun clubs, waived museum entrance fees, and highly discounted rates on season passes and big-ticket electronics.
Being ashamed to talk about finances
A typical mistake college students make as they gain control of their personal finances is keeping struggles a secret. Oftentimes, colleges have free financial advising services that can help you through money mishaps. Another route is enlisting the help of a trusted parent or guardian. They may have thrifty, money-saving ideas, or they can potentially lend a hand when funds get too tight for comfort. Sometimes parents are able to help their kids pay for college through Parent PLUS loans. And the good news is that these types of loans can be refinanced, leading to a reduced interest rate and the possibility of paying off their debts sooner.
Is eating out every day really necessary? Is purchasing the latest and greatest tech a responsible financial move? Chances are, by cutting back on unnecessary expenses, you can build a security fund and pay back loans without stress. Consider your bank account before making extravagant purchases.
To wrap up
Unfortunately, many college students face financial hardships in their first year as new responsibilities add up and independent ventures stoke lousy spending habits. However, with some financial guidance and dedicated tracking, college students can build a bright financial future.