A college student who wants to avoid money mistakes.

Top College Money Mistakes

Are you about to head off to college? If so, you have a lot to learn, and not all of your learning will be in a book. For most college students, this is the first time that you will have to really deal with money management. That leads many to make a lot of potentially big mistakes. Take a look at some of the most common money mistakes that college students make and see how many you can avoid.

Borrowing As Much As Possible

For an 18 year old college student, free money is hard to turn down. You are offered these fantastic student loans and you want every dollar that you can get in your pocket. Because repayment is years away, the temptation to take out the maximum loan amount is just too hard for most to resist.

The problem is that repayment is not as far away as you might think. The 4 years of college will fly by and if you take out the maximum loan amount each year, you can accumulate quite a bit of debt. This is debt that you will have to start paying just 6 months after you graduate.

Starting your career is not easy after college and in just 6 months you are unlikely to be making a great deal of money. Your huge student loan payment will be a burden that will drag you down and limit your options. Instead of searching for the perfect job, you may end up having to take whatever job you can get, just to pay your debt.

Do yourself a favor and only borrow what you need to survive in college.

Not Working During College

We get it, college is an experience and you want to make the most of it. It is understandable that you do not want to miss out, but adding just a little bit of work in to your schedule can make a huge difference to your eventual debt.

Simply working 10 hours a week is all that it takes. Over the course of a 9 month school year, that is over $5000 in income. During your full college career, that is $20,000 that you would not have to borrow. Leaving college with $20,000 less in debt would be a huge plus and you can do it by working just 10 hours a week.

Even the busiest college student can manage adding just 10 hours a week in part time work to their schedule.

Skipping Community College

Community college might not be the dream of high school grads, but it can save you a lot of money. Tuition can be as little as 10 percent of the cost of a major university and textbooks are generally much cheaper as well.

A smart route for those looking to minimize debt would be to spend their first two years in community college. You can then transfer in to that major university. probably with a much higher GPA than you would have otherwise had. Since you will get half of your credits from the major university, your degree will be in that universities name. That means that no employer, or anybody really, will know that you did not spend your entire college career at a major university.

If the idea of spending your first two years at community is unbearable, you can still take advantage of the savings. During the summer, when you come home from college, pick up a few credit hours. This will allow you to still save thousands of dollars while getting the full college experience.

Not Having A Budget

College is the time to start learning financial responsibility and that means budgeting your money. Most college kids will have limited funds and that means that you have to make your money last over the entire school year.

Divide out the money that you receive from loans, savings and grants by the months that you need it to last. Then, write out a monthly budget that will allow your money to make it the entire school year. Make sure to plan for all of your expenses such as school supplies, transportation, food and entertainment.

If in doubt about what you will spend your money on, live cheap the first month and write down everything that you spend money on. You will then have your budget categories and will be able to delegate funds where they are needed.

Dabbling In Payday Loans

Payday loans are one of the most dangerous college money mistakes that you can make, but many college kids have started to experiment with them. Do not make the same mistake.

The problem with payday loans is the sky high interest rate. Because of the short loan terms and high fees, the APR on these loans is usually well over 400 percent. Paying 400 percent interest on a loan is no way to handle your finances.

If you find yourself in need of a few hundred dollars while in college, do not go after what looks like easy money. Payday loans are far from easy, so look for alternatives.

Payday Loan Alternatives

Plasma donation is one alternative and it is both profitable and rewarding. Plasma is always in high demand and you can make several hundred dollars on your first donation. Get the money you need while doing a good thing.

Craigslist is another possibility. If you have something to sell, you can usually find a buyer and make some quick cash. Just watch out for scammers and only accept cash.

Finally, although their are other options, you can look into an app. Apps like Bridget can allow you to borrow $100 to $200 and pay it back on your next payday.

Posted by
James Car

James Car is a finance, loan and budget expert based in the United States. After attending Brookhaven college, he went on to become a successful entrepreneur. He now enjoys writing articles that help people save and make the most of their money.