For many young people, college is the first time living away from home.
That also means college is the first time managing personal finances.
Many students may not realize it, but financial habits developed in college can either make or break a person’s future.
It’s essential to kick bad spending habits to the curb to ensure your future is a bright one.
These are the 5 bad college spending habits that you need to stop right now if you want to start down a road of financial success.
Abusing Credit Cards
Credit cards are convenient, but credit card debt is serious. Unfortunately, many college students fall into high interest debt that can lead to years of repayment and a poor credit score.
If you have high interest rates, bills can sneak up on you. And if you’re not careful, unpaid balances will multiply. When bills multiply, the results are disastrous.
Compound interest is extremely powerful. And with debt, it is working against you. The key to financial success is to make compound interest work for you (like with investments) and not against you (like with debt).
If you want to prevent credit card debt, don’t have a credit card at all.
Even though it’s relatively easy to get a credit card (unless you’re in a lot of debt already), the best thing to do is not have a credit card at all, especially while you’re in school.
Buying New Textbooks
Some school items can get expensive, such as textbooks. You might get tempted to put your school expenses on a credit card.
Spending money on expensive textbooks can add up quickly, which is why you need to take the time to find a different solution.
For example, you can do the following instead of buying a brand new book:
- get a used book from Amazon,
- rent one from Chegg
- share a book with a classmate
It’s also easy to put all of your car gas and other car expenses on a credit card. However, instead of driving your car everywhere, consider these alternatives:
- take a bus to school and other locations
- bike to school
- carpool with a friend
- take the train to new cities
- walk to nearby restaurants and stores instead of driving
If building your credit is a concern, consider a prepaid credit card instead.
If you happen to get into debt, it’s not the end of the road.
It is import to address your high interest debt before it gets out of hand. That means setting a budget, living within your means, and making more than the minimum payment each month.
Delivery and Takeout
Who doesn’t love delivery?
It might seem like a small indulgence, but takeout and delivery food adds up quickly. Especially when you’re on a college budget.
The following scenarios may pop up, and we’re going to provide a few examples.
Hopefully, these examples will prepare you to say no or come up with a better solution should you ever have to deal with them:
- A friend asks to borrow money to pay for graduation party food because he or she didn’t use their money wisely during the school year.
- A boyfriend or girlfriend expects you to buy them expensive meals.
- A classmate can’t afford to buy snacks with you for a class you’re both in and expects you to absorb the entire cost.
- A roommate wants to have a huge pizza party and asks you to pitch in to buy half of the pizzas.
- Your friend happens to be sushi obsessed and keeps inviting you to eat at all of the local hotspots, and it’s hard to say no because you love sushi too.
- You live in an area that offers expensive food tasting events, and you enjoy trying new cuisine. You also don’t want to miss out since you’re in part of the world’s food mecca.
Instead of eating out and giving in to peer pressure, cook more meals at home. Even if you don’t have a kitchen, there are some great dorm room cooking hacks that can help lower your monthly food budget. If your roommates insist on eating out all the time, another idea is to split meals. At least if you’re spending money on take-out, you can cut the bill in half.
Not Using Student Loan Money Appropriately
Some students get student loan checks mailed to them directly, and they may be tempted to spend the money however they’d like.
However, you should only use the money for school and essential living expenses.
Think of all of the activities during your college years friends may ask you to do with them. Many times, these activities mean one thing: spending a lot of money.
As an example, we’re going to provide you with some more scenarios so you will hopefully have the willpower to say no to these pricey activities.
- A friend or roommate pressures you to buy concert tickets and if you really like the artist, it will be hard to say no.
- During spring break and other breaks, friends want to go on an expensive road trip to check out the sites.
- A girlfriend or boyfriend wants to go on a lot of expensive dates which include fancy dinners, movies, and venturing to nearby cities. (We mentioned this earlier as well.)
- Your best friend asks you to purchase a ticket to visit him in New York City.
- A friend found a fantastic gym where you can work on your physique, but the only problem is it costs more than $50 a month.
- Some of your friends have expensive clothing such as the latest running shoes and top of the line leggings. You want to fit in by buying the same clothing.
- Buddies want you to pitch in to buy a new pool table to put in your shared living area.
As you can see, it’s likely some or all of these scenarios may come up while you’re in college.
Hopefully, by having a good idea of what you may get pressured to say yes to, you’ll be able to say no or at least, choose which activities to participate in more wisely.
Don’t have FOMO (fear of missing out) – make good decisions and use your money wisely.
Spending borrowed money frivolously is a colossal mistake.
Remember: you have to pay it back! With interest!
If you’re tempted to spend the money on things you don’t need, ask your parents to help you manage the money (even if it’s embarrassing).
You should also think about creating a system of labeled envelopes that tell you what you’re allowed to spend and where the money is going (i.e., books or meals at the cafeteria). Similar to paying off a credit card, you will need to pay back your student loans.
Think long-term as opposed to short-term. Otherwise, student loans (and credit cards) can haunt you for years to come.
Not Taking Advantage of Financial Aid
Good news: Financial aid and scholarships are literally free money for college.
Unfortunately, many students don’t apply for a scholarship when they could have gotten one. Don’t make this mistake because you could benefit from one!
Even if you don’t think you’ll receive a scholarship, it doesn’t hurt to apply. You never know if you may get a scholarship (or more) based on your GPA and talents.
Receiving a scholarship can help you save a ton of money and prevent debt from student loans, living expenses, books, and more.
Drugs and Alcohol
If you take a look at the data, it’s clear that drug and alcohol use is high on college campuses.
Having some fun in college can be good (as long as you’re responsible). But if you’re not careful, “fun” activities can start to take over your life and your budget.
The last thing you want is to get behind and not perform well at school because you’re so caught up in drugs and alcohol.
If you participate in drinking with friends, house parties are a lot cheaper than going to bars.
Also, it goes without saying, but don’t allow anyone to drive home drunk. DUIs are expensive. Not to mention dangerous.
Moderation is vital because it will help your well-being and your budget. Putting too much emphasis on alcohol and drugs (or both!) can put a big hole in your wallet rather quick. After all, partying too hard and not having enough money won’t get you very far in school!
Getting into debt is very easy.
Getting out of debt is a different story.
To prevent yourself from making poor financial decisions and accruing unnecessary debt, set yourself up with positive spending habits right from the get-go.
If you decide to “wing it” while you’re in school and not consider the consequences it’ll come back to haunt you.
Imagine living a life in debt and living paycheck to paycheck! Don’t let that be you!
You can have a happy future by being savvy with your money. Develop positive spending habits as a young student, and you’ll be able to enjoy your college years and the years that follow debt free.
|Logan Square boasts of both comfort and convenient student living in Auburn, Alabama (AU). With oversized student apartments, tailored facilities and amenities, and just steps away from Auburn University, Logan Square is the preferred student accommodation to live, learn and experience student living!|