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Top 5 Money Mistakes of College Students

Are you a college student trying to navigate the financial challenges of campus life? It can be tough to balance the demands of schoolwork with making ends meet. The truth is, many students make mistakes when it comes to managing their money.

You’re not alone if you struggle to make the most out of your finances. A study found that college students have lower levels of financial knowledge, which correlates to increased debt levels [1]. This explains the prevalence of college student money mistakes.

What Are the Most Common College Student Money Mistakes?

Let’s look at the top five college student money mistakes to avoid. From not having a budget to racking up too much credit card debt, these blunders can set you back and make it harder to achieve your financial goals.

By being mindful of these common pitfalls, you can set yourself up for a bright financial future:

  1. Not Having a Budget or Plan

Recent high school graduates may not be accustomed to making a budget or financial plan yet. But without a budget, it’s easy to overspend on non-essential items or not have a clear understanding of where your money is going. In college, you don’t have mom and dad watching your every move. So, you must take control of your spending to avoid financial difficulty later.

Take the time to create a reasonable budget that outlines your income and expenses. This helps you ensure there’s enough money for the essentials. You can record on a spreadsheet, use a budgeting app, or simply write it down on paper. Whatever method you choose, be sure to review and update your budget regularly to stay on track with your financial goals.

When making a budget, first consider the non-negotiable expenses like rent, food, transportation, healthcare, and utilities. Most of your funds should go toward these. Allocate some cash for leisure spending like entertainment, dining out with friends, and travel, but don’t go overboard. Finally, if there’s leftover money, consider adding it to your emergency fund.

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  1. Taking On Too Much Credit Card Debt

Credit cards can be a convenient method of paying for things. But be careful not to overuse them. When used responsibly, credit cards are a practical tool for building credit and managing expenses. But if you start carrying a balance from month to month and accrue high levels of debt, you could find yourself in a dire financial situation.

Avoid taking on too much debt by watching your credit card spending. Some experts recommend only spending what you can pay off in full every month, and sticking with only one or two credit cards.

Paying in cash (or using a debit card) can be a good option for college students looking to manage their finances effectively. When you pay in cash, you see exactly how much money you have and are less likely to overspend. Using a debit card means you can only spend money that you have in your account. This helps you stay on budget and fight impulse purchases.

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  1. Ignoring the Impact of Student Loans

While student loans can be a vital tool for affording college, it’s essential to understand the terms of each loan and the potential consequences of not paying them back on time. When you take out student loans, you’re borrowing money that you’ll owe with interest.

Late payments can result in hefty fees and damage your credit score. Avoid this dilemma by being aware of your student loan repayment obligations. Make timely payments, and if you can, schedule them on auto-pay so you don’t accidentally miss any.

  1. Not Taking Advantage of Free Money

Scholarships and grants are forms of financial aid that don’t need to be repaid, making them valuable resources for paying for college. There are countless out there based on various factors like merit, financial need, and field of study. By not applying for these awards, college students may be missing out on free money and opportunities to reduce their educational costs.

Regardless of whether you’re a freshman or senior, it’s not too late to research and apply for scholarships and grants. Be prepared to fill out applications, submit transcripts, write essays, and turn in other requested materials. It may take some time and effort, but the payoff can be significant.

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  1. Spending Recklessly

The new freedoms that come with college life can make it tempting to overspend on non-essential items and expensive events. While it’s okay to treat yourself once in a while, you must pay attention to your spending habits. Avoid making impulse purchases and dining out frequently, as these are surefire ways to go over your budget quickly. Instead, save money in college by cooking healthy meals at home. Limit eating out to once a week, and make sure your non-essential purchases are within your budget.

Avoid These Pitfalls to Come Out Ahead Financially

College students face a plethora of financial challenges that can impact their stability. From not having a budget or plan in place to spending recklessly, these common money mistakes can have severe consequences. Young adults must be aware of these pitfalls and take steps to avoid them. By sticking to a realistic budget, using credit wisely, and taking advantage of scholarships, students can earn their degrees with less debt.


[1] College Students and Financial Distress: Exploring Debt, Financial Satisfaction, and Financial Anxiety, Kristy L. Archuleta, Anita Dale, Scott M. Spann

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