College life is a time when young minds tend to be reckless as emotions and adrenalin both run high during this period. This is why college students often tend to make mistakes when it comes to handling finances.
Here are some common mistakes made by college students –
1. Going on spending sprees
Unnecessary spending tops the list when it comes to financial mistakes among college goers. Instances include – buying upmarket outfits or luxury shoes and watches. It is important to understand that these fancy accessories will not bring anything worth the while except some momentary self gratification. Shop wisely guys! Young and impressionable minds also fail to differentiate between wants and needs, and tend to spend more on wants than on needs like books, tuition fees and other necessary expenses. One very prevalent miscomprehension is the one between needing a break and wanting a vacation. The first could very reasonably be a need, but the latter is by all means an unjustified want.
2. No habit of saving money for rainy days
Most college goers do not save any part of the allowance or pocket money they get from parents. Instead, they spend more than they get and often have to borrow money from friends or seniors. It will do them a great good if they understand the importance of saving a little amount of money as emergency fund which will act as a safety net at times of need. This habit will also help them spend within a limited scope.
3. Not managing money wisely
Most families, organizations and businesses run on a budget. But when it comes to the young minds studying in colleges, they tend to throw caution of any kind to the wind and live life as if there is no tomorrow. Result? Financials hiccups every now and then. Monthly budget is the thing that can help them steer clear of any such fund issues. Think in the lines of fixed cash in bags or wallets, swapping credit cards with prudence and using digital expense managers or budget calculators. Equally important is to keep track of your spending on a regular basis. Today, there are a host of digital tools and apps to track daily, weekly and monthly expenses. Also stay clear from spending lavishly on things like housing, and go for on-campus accommodation or being a paying guest. Think of roping in a friend while buying things you both need.
4. Improper handling of education loans
Many college goers need to take education loans to meet the college fees and other related expenditures. But using the loan amounts for night outs or recreational purposes is a deadly practice which sooner or later will result in serious cash crunch.
5. Instant loan apps are dangerous traps
Instant loan apps provide loans to borrowers, including students, without collateral. Tempted by the instant ownership of hard cash many students often end up in high debts as they use the money unwisely. If you happen to avail an instant loan make it your unfailing goal to repay the EMIs on or before due dates. This keeps your credit score high, and provides you with financial stability while saving you from high interest charges applicable in case of late payment of EMIs or in case of default.
6. Lack of financial literacy awareness
Students often feel it to be too early to start money management during college days. This is a completely wrong notion, as earlier you get yourself financially educated, better for you. Consider it to be of immense importance to be aware of loan terms and conditions written in documents, before signing any loan deal.
7. Following prey to Peer Pressure
Peer pressure is another great deadly push for mindless spending. It is important to understand that not all come from similar financial backgrounds, before falling prey to indiscreet and brazen competition. Without forethought there cannot be any money management.
8. Not opting for scholarships
Scholarships are great and every student should try and find out if there is one for his/her. Scholarships will alleviate a considerable financial burden from your parents and create more space for other necessary academic spending. Scholarships will also help you stay away from repaying huge EMIs right from the beginning of your career.
9. Missing free opportunities
Keep a watchful eye on discounts, perks and freebies generally available for college students. These include gym and library memberships, allowance on public conveyances and discount on books.
10. Making unsound investments
Stock market investment is a very in thing now a days and banks often encourage their customers to indulge in such activities. A caveat! Putting your or your parents’ money in stocks based on “hot tips” will in all likelihood spell disaster in near future. By all means stay away from such ill-advised investments as such tips mostly involve vested interest. Start your investment in shares with adequate education, research of relevant sectors and companies and awareness of the market.