Sadly, when it comes to money, students are often not the best. They tend to repeat well-worn errors that ensure they are short of cash when it is really needed.
A lot of these mistakes are down to students just not thinking about the future. A little simple financial planning would save a whole load of problems.
Failing to stay on top of your finances can take a huge toll. Aside from the life problems that debt will cause you, it can also lead to stress, anxiety, depression and other mental health issues.
Here we have listed the common financial mistakes students make, so you can avoid them.
1. Not budgeting properly
Students often don’t bother with budgeting, because it sounds like something boring middle-aged people would worry about. If you have a restricted income though, setting a budget is how you avoid spending more than you can afford.
It doesn’t mean you have to spend your days sat in a cold, dark room sipping water. Budgeting will still allow you to enjoy treats; it will just help to ensure you know what you can afford to spend on them.
To avoid going over your limits, work out a budget for each month. Tally up your income and outgoings to see what you will have left to spend.
2. Not taking advantage of discounts
The world of the student is one of studying and partying – but also of discounts. There are more student discounts out there than you can shake a stick at.
Among the examples are rail and bus companies offering special student travel cards that let you get from one place to another more cheaply. Saving cash on the daily trip to college or that train journey home to your parents for the weekend will boost your budget.
Many online shopping sites and music streaming services also offer discounts and free trials for students. Taking time to research them will save spending more than you have to.
3. Not earning extra cash
You may think that you will be able to survive on the student loan, but even if you can manage it, surviving is all you will do! A common mistake that students make over money is not having enough to afford any fun in-between the studying.
If you try to squeeze nights out and takeaways into a budget where the only income is the loan, the result is usually debt. The way to avoid that fate is to earn some extra cash. A part-time job, either online or in the real world, will solve the problem.
It cannot be so demanding that it eats into your course work time though. There are jobs specifically targeted at students that you can apply for.
4. Using a credit card at an ATM
Many students don’t realise the problems this can cause, so they happily use ATMs to withdraw cash on a credit card.
It is a mistake because this kind of cash withdrawal gets added to your credit score. Thus doing it regularly makes you look like someone that cannot live within their means.
This might not impact too much on you in the short term, but in the future, you could well end up wishing you had been a little more careful. After all, your credit score is what banks will look at when deciding whether to give you a loan or not.
You may be under the belief that they will be sympathetic towards financial mistakes made when you were a student. Loan providers typically do not take factors like that into account though, they just look at how financially responsible your credit rating says you are.
5. Taking out a big overdraft
New students are frequently offered special bank accounts that come with sizeable overdraft facilities and seemingly no interest on these. It looks a lot like extra free cash, and many find it impossible to turn down.
The period when the overdraft really is interest-free is usually only temporary though. After it ends, you can find yourself with hefty bank charges every time you are in the overdraft.
It is also important to remember that no overdraft is ever really free. It is money that you owe to the bank and has to be repaid at some point.
Steer clear of this common mistake by keeping your overdraft at the lowest limit possible. It should be for emergencies only.
There are quite a few financial pitfalls out there for unsuspecting students. All of them can be skirted with some research and common sense though.
Follow the five handy tips above to avoid financial and health troubles while keeping enough cash to have fun while you are at university or college.