Financial Mistakes College Students Make and How to Avoid Them
College is an exciting phase in life. For many students, it’s the first time they gain a sense of independence, including financial responsibility. However, managing finances wisely during this period can be tricky. Between the excitement of newfound freedom and the pressures of academic life, it’s easy for students to fall into common financial traps. Poor financial decisions in college can lead to debt, stress, and missed opportunities for personal growth.
In this article, we will explore some of the most common financial mistakes college students make and provide practical steps on how to avoid them to ensure financial stability during your school years and beyond.
Expected Learning Outcome
By the end of this Naira & Sense article, you should:
- Understand the most common financial mistakes students make and why they happen.
- Recognize practical steps to avoid credit dependency and overspending on non-essential items.
- Be able to create a simple budget to manage your income and expenses.
- Learn the importance of saving money and how to build an emergency fund.
- Be aware of student discounts, benefits, and financial aid opportunities to help save money.
1. Over-Reliance on Credit
The Mistake:
One of the most common financial blunders students make is relying too much on credit or student loans for expenses that could be managed differently. Credit can seem like “free money” at first, but the interest rates on credit and loans can quickly add up, leaving students buried in debt by the time they graduate.
How to Avoid It:
- Use Loans Sparingly: Only use loans when absolutely necessary. It’s better to save up for purchases or use cash/debit cards to stay within your spending limits.
- Avoid Unnecessary Loans: Only take out loans for necessary educational expenses like tuition, books, and housing. Resist the temptation to borrow more than you need.
2. Not Having a Budget
The Mistake:
Many students enter college without a clear plan for managing their money. Without a budget, it’s easy to overspend on non-essential items like dining out, entertainment, and new gadgets. Not having a clear sense of your income and expenses can lead to financial problems and difficulty covering necessary costs.
How to Avoid It:
- Create a Budget: Set up a simple budget that outlines your income (scholarships, part-time job, parental allowance) and your essential expenses (tuition, rent, groceries, books). Dedicate a portion for savings as well. See HERE FOR MORE!
- Track Spending: Use budgeting apps like Mint or YNAB (You Need A Budget) to monitor where your money goes each month and to stay on track.
- Plan for the Unexpected: Include a category in your budget for emergency expenses, such as medical bills or unexpected academic costs.
3. Failing to Save
The Mistake:
College students often live allowance to allowance, spending their money as soon as they get it. This lack of savings can be detrimental when faced with unexpected expenses, forcing students to rely on loans or credit.
How to Avoid It:
- Start Small: Even if you can only save a small amount each month, it’s important to start somewhere. Open a savings account, and set aside a portion of any income or scholarship money.
- Emergency Fund: Build an emergency fund with at least three to six months’ worth of essential expenses. This fund can be used for sudden medical bills, emergency travel, or unexpected school costs.
- Automate Savings: If you have a part-time job, set up automatic transfers to your savings account. This makes saving a habit and reduces the temptation to spend the money.
4. Overspending on Non-Essential Items
The Mistake:
Between social events, trendy tech gadgets, and spontaneous trips, it’s easy for students to overspend on things that aren’t essential. While it’s important to enjoy college life, frivolous spending can cause financial stress and impact your ability to cover essential costs.
How to Avoid It:
- Differentiate Needs from Wants: Focus on spending on necessities (tuition, housing, food, books) before allocating money to “wants” like outings or the latest smartphone.
- Use Discounts and Student Perks: Take advantage of student discounts for things like food, transportation, and software. Many companies offer student pricing, and these small savings can add up.
- Wait Before Splurging: Before making a big purchase, wait for 24 hours. This gives you time to think about whether you really need the item.
5. Not Applying for Scholarships or Grants
The Mistake:
Some students assume they aren’t eligible for scholarships or grants, or they think applying is too time-consuming. By not seeking out financial aid opportunities, students leave money on the table that could reduce their financial burden.
How to Avoid It:
- Apply for Multiple Scholarships: Search for scholarships and grants at your college or through external platforms. Apply for as many as possible, even if the amounts seem small—every little bit helps.
- Check Renewal Requirements: If you already have a scholarship, make sure to meet any requirements to renew it each year (such as maintaining a certain GPA).
- Stay Informed: Many scholarships go unclaimed simply because students don’t know they exist. Stay in touch with your school’s financial aid office or visit websites like Fastweb to find opportunities.
You can see how insightful lessons on the Naira & Sense Series HERE
Comments (52)
First to drop a comment. I am honoured
Thank you CRF!, THIS WAS ONE AMAZING ARTICLE.
Mistakes are very well noted
I will make sure to avoid them
Thank you for this information, i have to try this
This is an eye opener
Thank you CRF
This is like the best Naira & Sense series I’ve read so far, so insightful. Kudus CRF.
My financial knowledge keeps getting bigger.
Thanks CRF👍🏽
This is so insightful. I wish I knew this in my first year in uni. Thank you so much CRflF for giving me a chance to redeem myself.
Honestly , that item 3 is somehow most especially in this critical times, very hard for we students .
How can we save money when ‘Sápá’ has taken us captive?
Even to eat is a war, let alone to save, despite the fact that we still hustle more, school unexpected expenses is just too outrageous these days.
May GOD and COLLEGE RELIVE FUNDS help us.
That was very expository.
It opened my eyes to better ways to avoid getting into financial crises
These are really helpful knowledge for us students. God bless CRF
An insightful and inspiring one…
Emphasis on the “save” no matter how little.
Thank you CRF.
This is insightful, thanks CRF
Wait before for 24 hrs before splurging: this is very important, there are some expenses that will seem so important and will be like ok I have to buy this until you buy it and discover that it was just an impulse purchase and it seems as if you have wasted your money
This is insightful, taking away from this, i have learned to save as a important.
Always ditching out wisdom. Practical steps to avoid debts as a student. Thank you CRF for always.
This is an eye-opener from financial crisis. Good work 👍
Really learnt a lot.
Now I’ll create a budget.
This actually teach me so many things about mistake .I learnt a lot here.thank you
This is quite insightful
I have learnt something new.
Thank you for another great insight.
This will help me in my spending habit.
I just figured out my errors,
Thanks for the article ❤️💯
A must read for every students that value Financial freedom!
Thank you CRF for this
This is honestly a great guide. Thanks CRF.
This is insightful thank you CRF
I never wanted reading it before
But after I read the first lines
Found it enlightening
Thank you CRF
Thank you very much for this information I have started mind already
Wait before splurging….
That was an anchor sentence. I learnt something today.
Mistakes I have thought so much on and I just realized I’m a victim of most of them. Thanks for this advice and support
This really benefits a lot, many students have a good source of income, but due to lack of financial literacy, they always went become broke.
It is a mind-opening for students like me. This is speaking exactly to me. Thank you for the knowledge
The piece truly inspires and ignores my potential. Thank you CRF
Thank you CRF. I hardly use credit, but the saving aspect, any time I start saving something comes up and I spend the money 😊
Nice information
Thank you 😊
Thank you CRF for this insights,it really a step to financial breakthrough.
Thanks for the information.
Very interesting and educative lessons.
I learnt alot from this great piece.
Thanks for the writer.
Really learnt alot from this amazing articles ♥️♥️
Learnt something new Today.
Learnt how to maximum scholarship opportunities whenever i see it.
These are serious mistakes to avoid.
Thanks so much CRF.
Learnt something new today
Thank you Crf
This is very insightful. Load of thanks CRF.
Those sites suggested have been very helpful.
Thank you CRF
Thanks for calling our attention to this common financial mistakes.
God bless CRF!
Everything about this article is truly truly right in every sense and to some I am guilty of some listed above as mistakes, I have learned and I will try to do better and amend as well with cautiousness
Tremendous concept.
Budgeting has really helped me with my finances. Thanks CRF
This is so insightful… I am glad to have read it
Learnt something new today
Insightful. Thank you CRF.
Another wonderful insight.
Thank you.