The Biggest Financial Mistakes You Can Make In College

money

As the price of attending college increases and the number of well-paid entry-level jobs shrinks, most college students worry about their post-graduation finances. We can no longer assume that a four-year degree will translate into a good job (or any job) right after college. Instead, many graduates make do with adding yet another internship to their resume or move back in with their parents while they search for a job in their field of choice. Then, as they search for available positions, Sallie Mae comes knocking at the door.

While this situation is far from ideal, it is a reality that many millennials face. There are plenty of ways to improve your chances of receiving a job offer before you graduate, but it’s equally important to prepare yourself financially in the case that you don’t receive an offer right away.

First, if you don’t have a post-graduation emergency fund, you can experience some very frustrating set-backs when money is already tight.  After you graduate you will have a lot of expenses both unrelated and related to your job search. For many grads, you will be paying way more bills than you are accustomed to, in addition to loans, extra travel expenses for interviews, and more. As a result, you will need an emergency fund for unforeseen expenses like your old car breaking down or a sudden medical issue. You can start preparing your emergency fund during college by creating a savings schedule for yourself or using money saving apps like Mint. Personally, I realized that I spend a ton of my money on food, so now, every time I eat at a restaurant, I write down the amount of money I spent. Then, I divide that number in half and put that amount of money into my emergency fund. You’d be surprised how much money accumulates by the end of the year.

Second, If you don’t get a credit card, you might have trouble applying for loans in the future. For most of your late teens/early adulthood, people will probably tell you to avoid getting a credit card. A credit card can be trouble in the hands of someone who doesn’t budget well, so most college students only use debit. Of course, eventually, you will absolutely need a credit card in order to establish good credit and apply for loans, so it is imperative that you sign up for one before it’s too late. By signing up for a credit card during your college years, you can save yourself tons on future bills — you must simply remember to treat it no differently from your debit card and set a reminder on your phone or computer to pay it off each month.

Third, letting your coffee habit (or any other seemingly small frivolous expense) get the best of you adds up fast.  If you are regularly on a college campus you will likely see Starbucks cups (or Dunkin Donuts depending on where you live) in the hands of every other student. When you’re working hard and managing a busy schedule, caffeine and sugar will seem like a good way to keep yourself going. Unfortunately, in addition to being bad for your health, those $5 lattes can take a huge chunk out of your weekly budget. Instead of spending $100 per month on coffee, save your cash and find ways to improve your sleep schedule and quality. It might be financially beneficial to power down your electronics an hour before bed and find ways to break up your homework load so you can get more sleep.

Lastly, spending money on goods rather than experiences will always leave you wanting (and spending) more. College is a great time for making memories and experiencing new things on a regular basis, so take advantage of it! Instead of spending your money on clothes, forgettable fast food, or an upgrade for your cell phone, spend money on activities you can enjoy with your friends. When you buy a material object, the newness of it fades or it is quickly consumed. Experiences, however, can create positive memories that leave you feeling more satisfied. If you have the choice between buying a new piece of costume jewelry from Forever 21 (that will probably break anyway) and going to a great comedy show with your loved ones, the comedy show will probably be a better return on your investment. You’ll leave college feeling like your money was well spent.

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