It was surprising for me to find out that I haven’t written a blog directed at the mistakes college students make given the title of my blog, but here we are. There are a number of personal finance mistakes that students make in college that can set them up for a poor start to their accumulation years of work after university.
Failing to Make a Budget
Before your school year begins you should sit down and create a budget for monthly and yearly expenses. Creating a budget will decrease the odds of money running out before the end of the year. You will probably have little income and this may lead to you wasting your money on things you don’t need. Start by making a simple budget as you probably have few financial responsibilities. You can get a better idea of where you money is going and build good habits for after graduating when a budget is essential. This will decrease the amount of stress you have during the school year and allow you to allocate more of your time towards studying.
Borrowing More Than you Need
We have previously talked about how banks will qualify you for more than you can afford and the same thing happens through provincial and government loans. You will often get qualified for far more than you need. The cost of higher education has resulted in parents not being able to provide a significant amount of financial support and students are forced to rely on students loans to pay for education. If you are a student try to restrain from using your student loan money for expenses other than necessary living expenses. It is important that when you accept this money if necessary that you only spend the amount that you need and use the rest to pay off your loan in order to suffer as little interest as possible. Your future self will thank you for accumulating as little debt as possible.
Attending an Unaffordable University
A mistake that is very common is attending a university that is unaffordable for the student. The school may be unaffordable for many reasons including being away from home and attending a prestigious university. In many cases the school you attend is not important, I always say that you never ask your doctor where they got their degree all you care about is that they are qualified. It can be beneficial to do your first to years of university at a local school and then transferring to a more prestigious school in the upper years if necessary. Always consider the return on investment by attending a different more expensive school. Students may also lose a significant amount of money by attending university when they are unsure of the career path they want to pursue.
Not Applying for Scholarships, Grants and Bursaries
There are many scholarships, grants and bursaries that go unclaimed each year. By applying to these financial aids a student can save a significant amount of money. Financial aid can take that significant burden off of families attempting to pay for their child’s education. This can leave room for the students to live more comfortably in university and allocate money towards other necessities and leisure. This can save students from entering their professional careers with a lot of debt.
For more personal finance content make sure to follow our Instagram account @therichcollegestudent.