Freshmen Money Mistakes
FOR MANY FIRST-YEAR COLLEGE STUDENTS, independence also equals financial indulgence. Without a parent telling you “no” or forcing you to put some of your money into savings, it’s easy to rack up debt quickly just from splurging on things like pizza and cute shoes. Here are some of the most common money mistakes that freshmen make—and how to avoid them.
Not all credit cards are created equal, and not all credit cards are bad. But applying for every credit card offer filling your mailbox is one of the biggest mistakes college students make. Choose one with a low interest and no hidden fees, and only charge what you can afford to pay off every month. Pay your bill when it’s due (or sooner) or they can raise your interest rate and tack on late fees. This is a great time to start building your credit—not your debt.
BREAKING THE BANK
Create a budget for the month (or semester) to account for everything; toiletries, entertainment, food, transportation, clothes—even things you don’t know about yet (an emergency fund).
Evaluate your spending at the end of each month to see where you overspent and where you need to cut back in order to stick to your budget.
DO YOU WANT FRIES WITH THAT?
Although you may not have as many job choices if you’re doing work-study, other employment options can vary greatly in pay, from minimum wage for fast food to $20/hour for tutoring to $40/hour for website design. It’s tempting to jump at the first job that comes along, but if you can make four times as much money in the same amount of time, isn’t it worth a little more effort to find the higher-paying job or create your own business?
THE OTHER “F WORD”: FAILING
Flunking a course isn’t just bad for your chance at making the dean’s list, it’s also bad for your (or your parents’) wallet. You can lose the money you paid for the course, and if it’s a required course, you may have to pay more money to retake it later.
If you’re struggling with a class, go talk to your advisor and/or the professor immediately. He or she may be able to help you or at least recommend a tutor or study group. Sometimes professors will take into account special circumstances, like if you were sick in bed for two weeks or had to fly home for an emergency. The important thing is that you talk to your advisor or professor as soon as possible.
Go to college with a general idea for a budget and modify it as needed after the first month or so. While you’ll need good credit later to buy a car and house, you may also need it to get a job after graduation! Some states still allow prospective employers to pull your credit report to help them determine if they find you fiscally responsible. So yes, your $300/month pizza habit could cost you that job with a $50,000 starting salary. That’s a lot of cheese.