4 Common Money Mistakes College Students Make + How To Avoid Them
There’s probably only one time in your life when it’s socially acceptable to be broke, when you’re a college student. Most college students don’t have a lot of money and despite this fact, it seems easier to have a decent life. Yes, we take out student loans, but they’re not due yet. However, the decisions we make as college students have a major impact on our lives in the future.
The system is far from perfect, and it’s easy for college students to fall through the cracks. We send college students out into the world, but sometimes we forget to talk to them about money. I don’t like it when people shame the financial decisions of others, especially younger people. I understand most people are doing the best they can. These are actionable tips I think any college student can apply to their lives. I also won’t try to sell you any fat-burning tea, I promise!
Now that I’ve graduated from college, here are the major money mistakes I noticed that I would recommend college students do their best to avoid.
Never Consider Community College
I’ll start this one by saying I don’t think community college is for everyone. I also don’t think college is for everyone. However, one thing I would encourage any potential student to do is to minimize the amount of student loans they have. With the rising cost of higher education, you have to be strategic and savvy to potentially save money. One way to do this? Community College.
A major benefit to community college is the lower tuition. Most community colleges are more affordable than a 4-year public university. According to Midlands Technical College, they estimate their students can save at least $8,000 in their first year.
I’ve even heard stories of people who are able to get a significant amount of money back after factoring in FAFSA and scholarships. This is money you could spend on a car, rent, books, technology new college students use like a laptop, or even save for your tuition in the future.
Similar to 4-year colleges, tech schools also offer scholarships and financial assistance. Let’s say I considered attending Midlands Tech after high school (this is in my hometown). Then, some of the financial aid options available to me would be MTC Foundation Scholarships, South Carolina Lottery Tuition Assistance Program, South Carolina Workforce & Industrial Needs Scholarship, South Carolina LIFE Scholarship, SC National Guard College Assistance Program, The Fairfield Promise Program, and more.
As I mentioned before, community college is not the right option for everyone. I know a lot of people who felt like community college wasn’t a good fit for them. In comparison, I know others who felt like community college gave them the opportunity to save money while still pursuing their education.
There isn’t one model for how community colleges are designed. Some community colleges work with 4-year colleges to ensure a smooth transition for future transfer students. For those who work full-time or have other responsibilities, community colleges have options to accommodate your schedule. This means you can be a part-time student or a full-time student depending on your current schedule. Many community colleges give you the option to study online also. Oftentimes, people thrive as online students. As I said, there is no one correct way to continue your education.
Another suggestion I have for college students is to consider taking classes at your local community college during the summer. This is a tip I heard from my fellow college students. This is a good strategy for gen-ed classes and intro classes you need to take. I know people considered this option when they knew a class would require more attention, wanted a lighter course load during the school year, or desired to graduate early. If you’re interested in doing this, you have to make sure your university will accept the course as an equivalent. I recommend talking to an advisor at your university to sort out the details with this.
I know there’s a stigma around community college, but I don’t think the negative stereotypes are true. I think further education can always have a positive impact on a person’s life, so make choices that work for you.
Don’t Keep Track of Smaller Purchases
This is a spending habit I started realizing about myself when I would look at my finances at the end of each school year. I was pretty frugal during college, but the main thing I focused on was my bigger purchases.
However, I have to admit I gave myself an unlimited budget when it came to candy, to be more specific, peanut m&m’s. I bought peanut m&m’s whenever I wanted while I was in college. This resulted in a lot of m&m’s in four years. I don’t regret my peanut m&m love, but I wish I would’ve kept track of how much they cost me. We both know peanut m&m’s didn’t lose me thousands of dollars. At the same time, smaller purchases of different things start to add up.
When we talk about personal finance it’s best to focus on the things we can influence. Staying educated about your spending can give you valuable knowledge about what’s important to you and the things you enjoy. To help with this, I recommend you keep track of your purchases for at least one week. I think this will give you a better idea of where your money is going. I don’t necessarily think you have to automatically change your spending habits, but you should get a better understanding of your spending habits.
For those who want to use an app to track their spending, I recommend checking out this article from Forbes.
Delay The FAFSA Process
I’m not even in college anymore, but just seeing the acronym FAFSA makes me want to cringe (sorry FAFSA). For those who don’t know, FAFSA stands for Free Application for Federal Student Aid. There are different types of federal aid available for you as a U.S. resident including grants, loans, scholarships, work-study jobs, aid for military families, aid for international study, and additional resources. This is the current way the U.S. government helps college students afford college.
For more information about FAFSA, head over to their website.
Back to the important part, don’t delay your FAFSA. It took me a while to decide which college I wanted to go to, I was even behind considering I started college in the Fall semester. While I did start college in the Fall semester immediately after I graduated, the process was stressful. I have older siblings, so my parents had more experience with the FAFSA process. But, it stressed me out a lot. Even as the years went by, I never felt comfortable completing my FAFSA. One year I had a small typo on my application and it seriously set me back. I would lose my login information or forget a security question. It’s almost funny now(almost), but don’t be like me!
I’ve heard other college students and their parents share similar experiences. I know FAFSA says they’re working to improve the process and I hope they are. Regardless of the process, it’s best for you to prioritize completing your FAFSA. The anxiety I had would lead me to procrastination. And then, of course, procrastinating made the situation more stressful.
During the process, be prepared to advocate for yourself. The details of the application process have to be correct. In order to complete your application, there is information you’ll need access to. Information like your income and tax info, if you're a dependent your parent’s income, and tax info will be needed.
Once you know you have all the information, compare schedules to make sure you can find a couple of days to potentially complete the application. I think it would be ideal if you choose a low-stress day when you’re well-rested and alert. I was lucky because even though I didn’t have any knowledge about the FAFSA process, my parents did. They already had a better idea of what to expect based on my older sibling’s experiences. If the FAFSA process is new to you and your parents I recommend lots of patience.
I urge you to do the opposite of what I did and complete your FAFSA asap each year. In order to keep up with the deadline dates, check their website for the most accurate and up to date information. I know FAFSA is aware of the reputation they have and each year they work on ways to make the overall process easier.
Use a Store Credit Card
The moment I graduated, I started getting a lot of credit card offers. A majority of credit card companies start to target recent high school grads and 17-18-year-olds. Many of these offers happen via the mail, but many stores are also on the watch for newly graduated high school students.
Why?
Well, after you graduate high school you start a new stage in your life. For a lot of people, this means purchasing a completely new wardrobe, new technology, and furniture for a dorm or apartment. Naturally, they’re excited about the new products they get to buy. For a lot of people, this is their first time outside of their parent’s house, and the first time they get to make their own financial and life decisions.
Companies know about this excitement and they do their best to exploit it. Many stores will notice someone shopping for typical college items and use this an opportunity to offer them a store credit card. Some also attempt to get you to apply for a store credit card before even considering how it will impact your credit. I’ve never had a store credit card, but I’ve heard a lot of bad stories about them. They know your average 18-year-old doesn’t know a lot about credit cards and they attempt to manipulate this.
One major thing I don’t like about a lot of store credit cards is the interest rate. According to SmartAsset, store credit cards have higher interest rates and are less beneficial to your credit score in comparison to a normal credit card.
Instead, there are better credit card options for you to use. I know a lot of people’s parent’s warn them about credit cards (my parents still do). However, if you’re going to get a credit card, it should help you financially. I like reading advice from companies like NerdWallet to learn about the pros and cons of each credit card. I also recommend you ask around. Some of your friends or family members may have a good experience using a specific credit card. Research as much as possible, so you feel comfortable with your decision.
Personal finance isn’t easy, especially when you’re a college student. There’s so much you’re still trying to figure out about the world. But, I think this advice can help any college student navigate their way to graduation and beyond.
Olivia Pandora Stokes is a twenty-something who works in marketing and has a love for vintage jewelry. She talks about personal finance topics relevant to young millennials including credit scores, student loans, savings accounts, and side hustles.
Money makes the world go round and it’s time for us to have candid conversations about our personal finances. But, money isn’t just money, and we owe it to ourselves to explore how the different aspects of our life impact our perceptions and advantages. Grab a cup of coffee and join me, as I talk about personal finance in The Money Talks Series.
