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Financial Management Mistakes College Students Often Commit

May 28, 2013

While furthering your education is certainly important, there are a number of pitfalls to look out for as well. This is especially true in the financial field as the excitement to start college and inexperience with money can lead to some very costly mistakes. So that you can avoid these errors in the future, we will look at some of the more common occurrences in which students misuse their money and end up in trouble.

Credit Card Debt

Since almost everyone has a credit card these days, it’s not unusual to think of it as a never-ending supply of cash. This is where a lot of students trip up as they use their credit cards too frequently, building up a balance that is very difficult to pay back in the end. Just like instant loans, credit cards are useful but only if taken out in the right circumstances. A student who pays for nights out, movie tickets, clothes and other luxuries with credit on a regular basis is on the way to owing a lot of money and ruining their credit history.

Failure to Budget

At this early stage of life, creating a monetary budget isn’t something that’s deemed to be very important. On the contrary though, since students generally have very little money available, they’ll need to carefully allocate their funds to cover everything in the right manner. If you’re living out of home and paying rent, this is especially crucial otherwise you might find yourself evicted. Luckily you can find plenty of options for affordable loans in the UK if you accidentally blow open your budget and spend too much. Even with this backup plan, keeping control of your cash is a smart move as a student.

Misusing Student Loans

If you’ve taken out a student loan, you should always remember what the extra money is for. Textbooks, tuition fees, stationery and other essential college equipment is what you should be spending this borrowed cash on. If you use some of it to go travelling or host a student party, you’ll have to figure out where to find the cash for more crucial education requirements. While you can borrow money again, you’ll have to pay back both of these loans in the future. This is an option that is only feasible if you can afford to pay back multiple debts at the same time.

Opting for Costly Degrees

The final mistake in this list is probably the biggest. Some students enroll in an expensive college simply because they think having the right name on the degree will help them once they graduate. While this is true for select colleges around the world, in some cases it makes little difference at all. Thus, you’ll end up paying a lot more for a university degree that won’t give you the added advantage you first thought it would. Stay smart when choosing your college. Do your research and see whether the name actually makes you employable before you agree to pay their expensive tuition fees.

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