College kids experience true freedom for the first time in their lives, and with this freedom naturally comes a lot of mistakes. That is all a part of growing up, but some of these mistakes can have long-lasting consequences. One of the most common areas that college students struggle with is keeping their finances in order. Going to college isn’t cheap, and many students pick up a lot of negative financial baggage along with their degrees. Follow this guide to avoid the common financial mistakes that college students find themselves making.
Credit Cards Are Not Your Friend
If there is one financial landmine that is most troublesome for college students, it is the easily triggered problem of credit card debt. The sad fact is that most 18 year-old kids are not financially savvy enough to handle the responsibilities of a credit card. When a typical college student gets a credit card for the first time, there is a major tendency to go on lots of shopping sprees. They can wrack up huge debts that will haunt them through the rest of their college years and beyond.
College-aged credit card holders need to keep in mind that using a credit card is not the same thing as saving money. You have to pay back every dime that you charge, and you will have to pay interest if you don’t pay your balance off like clockwork.
If you are a student getting a credit card for the first time, you should remember that the cardinal rule of smart credit card users is to never spend more than you can afford every month. Pay the entire balance off every month, and a credit card will be your financial friend.
Be Smart with Loans
As well as getting into trouble with credit cards, most college students also get into even more long-lasting trouble with their financial aid packages. Far too many college students are leaving school with huge student loan balances in the hundreds of thousands of dollars. It is important to only take as much out in loans as you need, and it is important to take out the right kind of loans as well.
If at all possible, college students should avoid taking out private loans. There are such large amounts of money available from federal financial aid programs that it doesn’t make sense to take out private loans. When taking out the federal student aid loans, stick with the subsidized loans as much as possible. These subsidized loans do not charge interest while students are still attending college, which is a great way of saving money on interest charges.
Buying a Car
Most college students can get along just fine without a car. Colleges and universities make it a priority to provide students with public transportation, and most college campuses are very walkable as well. If you are a college student that can do so, enjoy the freedom of not having to worry about taking care of a car while you can avoid it.