Top Financial Mistakes Made by College Students.
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Top Financial Mistakes Made by College Students
Summary:
Many college students make poor financial decisions due to a lack of financial education. They often aren't taught by parents or teachers about budgeting, maintaining a good credit score, and paying bills on time. Smart spending during college can ensure that future earnings are used for things you want, instead of repaying debts and loans.
Article:
1. Misusing Student Loan Money
Student loans are meant to cover essential college expenses such as tuition, books, and housing. However, some students spend this money on non-essential items like parties, clothes, gadgets, and dining out. Remember, you'll be repaying these loans for years, so use them wisely for your education, not your social life.
2. Accumulating Credit Card Debt
Even adults struggle with credit card debt, and for students with limited income, the challenge is greater. Relying on credit cards without a steady income source is risky. As a result, students might face hefty balances in addition to student loans. According to Nellie Mae, many graduates carry an average of $5,800 in credit card debt.
3. Late Bill Payments
Delayed bill payments not only damage credit scores but also hinder future financial opportunities like renting an apartment or buying a car. To maintain a good credit rating, keep credit cards to a minimum and always pay on time. Your future self will thank you.
4. Poor Budgeting
College usually means living on a fixed income from financial aid, part-time jobs, or parental support. It's vital to create a budget to manage limited finances effectively. A budget doesn't limit fun but ensures essential expenses are prioritized. Plan for monthly bills first, and then allocate any remaining funds for leisure activities.
5. Choosing an Expensive College
Some students head straight to costly four-year universities instead of starting at a community college. Community colleges offer a more affordable way to complete prerequisite courses. Transferring later to a four-year school can save thousands in tuition and reduce the burden of student loans that could last into your thirties.
Conclusion:
A lack of financial education leads many students to make poor financial decisions. Teaching students the importance of maintaining a good credit score, timely bill payments, and budgeting can make a significant impact. By practicing wise financial habits during college, students can focus their future earnings on aspirations rather than on paying off debts.
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