Posted by Kevan Lee :: September 16, 2008 @ 12:25 pm
College students are back in classes, back in the dorms, and back in arrears to Mom and Dad. Yes, all the signs point to school year being back again.
While hitting the books and meeting new friends are an enjoyable part of college life (unless the books being hit are about philosophy and the friends being made are not all that into you), slipping into debt is not. But it is popular.
College kids very rarely have a sense of financial responsibility. That’s what makes them college kids, in addition to their lack of hygiene responsibility and showing up on time responsibility. Sooner rather than later, they will fill their dorm rooms with the latest trendy toys and hit the town with their new best friends often enough to make a jetsetter blush.
But they don’t exactly have the money to pay for it all. Before they know it, they’ve outlasted mom and dad’s generosity, they’ve run themselves into credit card debt, and they’re still spending, spending, spending.
So in order to change their impractical and ill-advised ways, college kids are going to have to change their outlook on personal finance. Or, in the case of many fresh-faced coeds, they will have to create a personal finance outlook in the first place.
Here are four common college pitfalls to avoid on the road to 20-something solvency.
1. Too many credit cards
The first rule of college budgeting is that credit cards are off limits, no matter how cool the free t-shirt is. The credit card is the death knell to a coed’s chances of fiscal survival. Plastic creates problems, especially when plastic is associated with insanely high fees and interest.
Of course, some might argue that they can handle a credit card because they never spend more than they have. These students either grew up with a silver spoon in their mouths or are lying. If college kids are known for one thing, it is that they are poor. They go to class all day, work occasionally, and spend frequently. Having a credit card just exacerbates the process, and with no money to make payments, the credit card fees, interest rates, and penalties start flooding in.
That really is the catch. College students tend to get in trouble when they throw too many purchases onto a credit card because all too frequently they don’t plan on paying them off. Furniture, Xbox, and any number of other frivolous expenses that cost big bucks end up on the card, and with no way of paying for the purchases, the college student quickly ends up in debt.
Credit cards provide a very easy way out for college kids who love easy ways out. And what’s worse is that a lot of companies target college kids because they are the ones who are often most profitable. Instead of buying into the credit craze, college kids would be wise to put their purchases on their debit card, pay with cash, or keep themselves from buying altogether. They’d do well to remember not to buy anything they can’t afford.
2. Too many unnecessary purchases
College kids might reply, “What other kinds are there?” These are the kids who are probably in credit card debt.
Unnecessary purchases are rather easy when you’re in college because they come in all shapes and sizes. First off, there are dorm room purchases. Couches, rugs, pictures, TVs – these are necessities in the eyes of most college kids, but when it gets right down to it, they don’t need them. Really, if they live in a dorm or in an apartment building, then chances are good that their neighbors will have all that stuff anyway.
The freedom to buy new clothes is also a big temptation once college-aged kids leave the house and set out on their own. Combine that sense of entitlement with the new tastes and styles of dozens of new friends, and before you know it, some freshmen find themselves with an entirely new wardrobe.
College students need to keep in mind the necessary purchases, like school books and a meal plan, before they start making plans on where to put that new plasma TV. There are many more important ways to be spending money on a college campus than on bells and whistles that do nothing more than show status or entertain. To truly set a college budget straight, youngsters should make room for necessities and savings and splurge with the leftovers.
3. Going out every night
Another temptation for college kids is to constantly hit the town. They’re young, they’re freewheeling, and their Friday and Saturday nights are always free.
But those Friday and Saturday nights are also expensive. Combine the weekends with weekday trips to the restaurant or to the movies and social coeds can find themselves in money trouble fast.
Strangely enough, all the going out is fairly unnecessary. There are just as many fun events on campus, and with a cafeteria nearby, there’s no need to go out to eat every night. Rather than having a datebook filled to the brim, a money-conscious college student would know when to say “no” and would find their fun for free down the hall or in the Quad.
4. Mortgaging your future
College life is a once-in-a-lifetime experience, yet many people pay the consequences for that experience throughout their lifetime. Student loans, unwise purchases, and other issues can rear their ugly heads long after students have tossed their mortar boards into the air.
That’s why it is important to plan ahead, at least a little bit, while still in college. If a college student has an income (perhaps from a campus job or a benevolent allowance), he or she should think long and hard about putting a little of it away each month. That way, when they hit the real world, they can have a little bit of savings built up, or if an emergency comes their way, they can be prepared.
One of the great parts of being in college is the freedom and independence, but taking a little bit of responsibility when it comes to money will be a decision that college kids will be glad they learned early.
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