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Common Financial Mistakes in College and How to Avoid Them

27/06/2021 

College is an exciting time since it is often the first-time students are on their own. However, the increased independence also comes with more responsibility, and managing money is a key area many struggle in. If you do not address bad habits, you might retain them long after graduation. Still, there are several ways you can manage your money better to avoid financial stress.

 

Not Using Financial Aid

There are many forms of financial aid, including loans, grants, and others. But if you do not take advantage of them, you could miss out on some cash. Instead, fill out the Free Application for Federal Student Aid to get the funds you need for your expenses. There is a deadline to submit it, so keep track of that while looking for scholarships to help with tuition.

Make a checklist of what you need so you can better stay on track. You could feel overwhelmed, but it is best to get everything in order ahead of time. While not a form of financial aid, you could consider taking out a student loan from a private lender to help you with your educational costs. It lets you get the funds to finish your degree while reducing stress about money.

 

Not Having a Budget

If you do not have a budget, it will be that much harder to keep track of basic expenses. Look up basic money management tips and follow what best suits your current financial situation and goals. List out everything you are responsible for paying, whether that is books, tuition, food, or housing. Then list out all sources of income. Make categories for one-time expenses as well, such as spring break travel or holiday gifts.

Shop around to find the best prices on each item, whether it is dorm supplies, computer equipment, or groceries. Then set a limit for how much you are willing to spend so you don’t go overboard. If this is your first budget, you can ask a family member or friend to help you. Don’t forget to create a plan for unexpected income, such as gifts or refunds so you are not tempted to splurge.

 

Not Differentiating Between Wants and Needs

You likely receive advertisements every day for a range of products, and it is convenient to purchase them now. However, just because it is easy to make the purchase does not mean it is the right choice. Before you purchase something on impulse, you should ask yourself if this is something you really need. Think about whether it adds value to your life and whether you will use it often.

Consider making yourself wait before purchasing something on impulse. Then you can think about whether you really want the product. Create a list of things you are wishing for, and if you still want them in a month or so, you can then consider purchasing them. See if you can find the item on sale or use a coupon. Try adding a section to your budget for wants so you do not spend too much money on them. Allowing yourself to spend a little on fun things makes you more likely to stick to the budget.

 

 

This post was sponsored by Earnest & Kiplinger

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