Today I have a guest post by my buddy Sean over at One Smart Dollar. This post totally ties into my last post on stressing about student loans, and I thought it was a great supplement to those looking to go back to school or just starting college. His objective is to teach about personal finance based on both personal knowledge and experience.
College was easily one of the best times of my life. It was a time that I really became my own person and I found out who I really was. Some people (my parents) might say that I had a little too much fun, but in the end I received a degree from a top business school, I made some great friends and I met my wife.
In the past, I have talked about how there are plenty of high paying jobs available for those who decide not to go to college. On the other end, I believe that I have endless opportunities available to me now that I do have my degree.
Most incoming freshman are around 18 years old and it’s the first time being out on their own away from their parents. Most have never had to go grocery shopping, pay bills or even finish their homework without being told to do so. College is a time that most will make their first big financial mistakes. Luckily these mistakes can be avoided if you follow a few simple steps.
Financial Mistakes to Avoid During College
Not Applying for Financial Aid or Scholarships
If your family does not have the money set aside for your college tuition, you will need to make sure you stay up to date on all the requirements and deadlines for financial aid. Here in Colorado the deadline for application is June 30 for the upcoming school year. There are several different options available to you when looking for aid.
· Federal Loans – Generally have the lowest interest rate, currently as low as 3.4 percent for a direct subsidized loan.
· Private Loans – Another option but almost always has a high interest rate compared to federal loans.
· Grants – Grants are a form of financial aid that doesn’t need to be repaid unless you withdraw from your classes.
Scholarships are widely overlooked by a lot of college students because they feel they are only for students with top grades. Scholarships are actually available to almost any student no matter what your grades are, what income level your family is or what race you are. One of the most informative websites for college scholarships is FastWeb.com.
Failing to Set Up a Budget
I will be the first to admit that setting up a budget was not something I did in college. It also caused me to be quite broke most of the time. Most students either do not work or work part time due to class schedules. Because of this, income flow is going to be very slow. Having a proper budget will force you to stay on track of your spending and let you know when going out with your friends is not an option.
Not Understanding the Reality of Credit Card Use
Heading off to college not only means the first time on your own but also the first time most will have a credit card. Unless properly educated, that first college student credit card can end up causing a lot of damage. Some will use their credit card as a way to get around their limited budget, however, this will just leave you or your parents further into debt.
Make sure you use this opportunity to build your credit by using your credit card sparingly. This will not only give you a head start on being able to obtain lower rates on future financing, but it will allow you to get into a routine of staying within your means.
Jumping into a Major Too Quickly
Many college students will end up changing their major at least once during their 4+ years of school. While this isn’t the end of the world, it can end up costing you a lot of extra money. If you make the choice to switch majors then there is a good chance some of the classes you have taken will no longer be required for graduation. This is money that could have been used elsewhere.
Not Planning Ahead Before You Study Abroad
There is only one big regret I have from my time in college and that was not taking advantage of the study abroad program that was offered. While traveling has always been a passion of mine, I could never get myself to want to leave for an entire semester.
Too many times students choose their program for the wrong reason. They either pick it based on the location or it’s just the right cost. Just because it might be a cheaper program, doesn’t mean it’s the right program for you. Talk to your advisor and make sure the classes that you will be taking are approved for your major and will transfer. If they won’t then that particular program might not be the best fit for you.
College is supposed to be one of the best times of your life. If you follow these simple steps, you will not only enjoy yourself but you will also start your professional carrier on the right foot.
What financial mistakes did you make in college that you wish you could have prevented?