It can be easy to overlook certain spending habits and other financial details of your life as a college student, but it’s important to know that certain decisions will help build a financial foundation that can affect you for many years to come. From credit scores to careers, avoid making the follow money mistakes in your late teens or early 20s, which can potentially haunt you for years after graduation:
Taking out too much in student loans
Student loans are the only way many college students are able to afford tuition and other expenses. Although taking out a sensible amount in student loans as a last resort can be a reasonable solution, some students will borrow far more than they really need. If you absolutely must take out student loans, borrow only what you truly need to—the less, the better. The last thing you want as a new graduate is to already have a ton of debt.
Charging too much on credit cards
Students with limited financial resources will often apply for their first credit card while they’re in college, and many who are approved end up maxing out their credit cards in no time. Although responsible credit card use can be a good way to get familiar with paying bills and building credit, you don’t want to open up accounts for the wrong reasons and only because you’re struggling financially. This will only make your financial situation worse and can follow you after you graduate, and it’s even worse if you’ll also have student loan debt on top of that credit card debt. If you do open a credit card during your college years, aim for a low-limit credit card and keep charges at a minimum. Only spend what you can afford to pay back before the current billing cycle ends, so that you can avoid getting into credit card debt.
Not sticking to a budget
With the high cost of college combined with lack of income, it’s crucial for students to create a reasonable monthly budget and stick to it. Not saving enough, spending too much, and not sticking to a financial plan can result in overuse of loans and credit cards.
Attending college for too many years
Furthering your education by attending graduate school can be a great choice, and it can open up doors, but it doesn’t automatically translate to success, either. You could potentially take the same career path and receive the same salary than if you had just started working after receiving your bachelor’s degree. Carefully think about your career goals and evaluate your need for an advanced degree. Some career fields require more college beyond that initial four years, and there’s no getting around it. Other career fields don’t necessarily require it, and you might be better off skipping it or saving it for another time, perhaps after you’ve become more established in the working world.