College can be an exciting time. It's a huge step towards a more independent life, marked by new friends, frequent all-nighters, and memories that last a lifetime.
For many of you, it's also the first time you're fully responsible for your own finances. Now, all of a sudden, you are responsible for tuition, rent, books, groceries, and other things. That's a lot.
Luckily, the good news is that developing good money habits now will not only help you get through college but also lay the groundwork for a healthier financial future, giving you the skills to learn and grow.
The little things you do today can help alleviate many financial burdens later.
However, it is very easy to fall into the traps that can easily ensnare new and inexperienced adults, who may live that independence and freedom, and make some bad, if not poor, decisions that can haunt them financially for a long time after college.
This guide will cover the most common money mistakes to avoid as a student and provide some effective, practical student money tips.
Common Money Mistakes College Students Should Avoid
While it can be overwhelming to learn how to navigate financing and feel like you have no idea what to do, avoiding common student financial mistakes is generally pretty easy. Being aware of common pitfalls will help you avoid financial mistakes throughout college and remain in control.
1. Not budgeting at all
The biggest money mistake for students is that they do not budget. When we say a student should budget, we are not suggesting that budgeting is to limit your fun; it is simply telling you where your money is going.
Creating a budget has its perks. You are in control. You can view what's coming in from financial aid, employment, or family, and you can decide how you're going to use that budget.
Without a budget, it is easy to overspend and run out of cash before the month is up. It's the first step to reaching financial success.
2. Overuse of credit cards or money borrowing
Whether you are being offered a shiny new credit card on campus or have access to them online, college students face the temptation to use credit cards.
Although they may come in handy in an emergency, college students maxing out credit cards is one of the worst money mistakes they can make. Credit card debt is generally high-interest, and it does not take long for it to snowball, ultimately hurting your credit score for years.
The same can be said about money borrowed on loans. Only borrow what you need to assist with college costs, and know the interest rate. This is an important money mistake college students should watch out for.
3. Not paying attention to student discounts and deals
Consider your student ID as a golden ticket. Hundreds of businesses will offer a discount to a student on tech, clothing, restaurants, movie theatres, etc. Walking away from a student discount is like walking away from free money.
Always ask if there is a student discount. The idea of saving is in all the details. These small prices will add up, and you may end up saving money over the semester.
This is one of the easiest money mistakes to avoid as a college student.
4. Spending too much money on eating out and takeout food
It's very easy to grab coffee between classes or order pizza at night when you're in college, but they can wreak havoc on your budget when it comes time to pay the bills.
The convenience can add up very quickly. Learning to prepare a few simple meals is one of the best ways I can suggest to help save money. Planning your meals for the week can quickly cut down your food expenses; you will hopefully avoid overspending.
5. Impulse buying and "keeping up with friends"
Once again, social pressure is real and can lead to spending unnecessary money. You see your friends with a new gadget or outfit and feel like you need to keep up.
You can also easily end up making spur-of-the-moment purchases that you later regret. One simple trick is to give yourself 24 hours to think about it before you purchase something.
This one habit could save you from one of the most common financial mistakes made by college students.
6. Not saving at all (not even a little)
When you have tight funds, it can feel impossible to save money. But if you are not saving anything, this is a big money mistake. The goal is to build a habit, even if it starts with saving $10 or $20 a month.
This can be as simple as opening a savings account at a bank or credit union, along with setting up automatic payments to transfer money into it. This is how to start building an emergency fund.
7. Neglecting financial aid or scholarship opportunities
Many college students don’t seek financial aid because they think they won’t qualify. This is an awful mistake. Always fill out your FAFSA. You may qualify for grants (which are free money that you don’t pay back), work-study programs, or low-interest federal student loans.
Seek out scholarships as well. Scholarships can pay for a lot of your college expenses and help you significantly reduce student debt. This is important to how to avoid common student financial mistakes.
8. Paying for subscriptions or memberships that are unused
That free trial you signed up for last month? It’s probably charging you now. Small, recurring subscriptions for streaming services, apps, or gym memberships can sneakily strip your account.
Take 15 minutes and see what’s in your bank statements. Find any of these "vampire" costs and cancel anything you aren’t using. It’s a great, easy way to find additional spending money. This is one of the sneakiest mistakes students make with their money.
9. Buying new textbooks only
Textbooks are expensive (probably the most expensive thing college students purchase). One of the classic money mistakes college students make is purchasing everything new at the campus bookstore.
You can save hundreds of dollars by renting your textbooks, buying used copies online, or checking if a digital version is available through the university library. This easy switch could save you hundreds of dollars every semester.
10. Not preparing for emergencies
Life can be unpredictable sometimes. Your laptop may break, you may have an unexpected medical expense, or you may need to take a last-minute flight home.
If you do not have money or savings set aside as an emergency fund, these little inconveniences can become expensive financial issues for you.
That is why it is important for people to save money, even if it is a little at a time, when they can. Being prepared with a safety net gives you peace of mind and financial security. This is an important money mistake to avoid as a student.
Conclusion
Your time in college is the start of your financial journey. You are bound to encounter a few missteps; however, learning how to avoid the major mistakes sets you on a path to financial success.
There are some common money mistakes to avoid as a college student, such as not having a budget or relying on credit cards, both of which can be completely avoided with careful planning and awareness.
The habits you are developing now will serve you in lifelong financial success and help you avoid long-term stress. These will be your first steps in your student money tips journey.
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Frequently Asked Questions About Money Mistakes to Avoid as a Student
What are the biggest money mistakes university students make?
The stupidest money mistakes students make are not creating a budget—racking up high-interest credit card debt—and not applying for financial aid and scholarships. These usually result in long-term debt and financial stress; such mistakes should be avoided in the first place.
What are the most common money mistakes high school students make?
High school students often develop poor spending habits without understanding, simply by forming bad habits. Common mistakes include not saving money while holding part-time jobs, making impulse purchases driven by social pressure, and a lack of basic financial literacy before entering post-secondary education.
What is the 70-10-10-10 rule for money?
This is simple accounting for budgeting purposes. You can set aside 70% of your money income for living expenses, 10% for saving money, 10% for tithing/charity/giving, and 10% for investing/debt repayments. It’s a great framework for students to start learning about setting financial goals and managing their money effectively.
Is overspending a common mistake among college students?
Yes, overspending is one of the most common and damaging mistakes college students make. College students spend a lot of money without a budget on non-essential items (eating out, entertainment, shopping), because they are not tracking where their money is going. Students are increasingly accumulating debt, which can lead to financial worry or anxiety.
