15 Common Financial Mistakes That College Students Make
Your time in college and early career could be the most memorable years of your life. And why not? It is a time replete with friends, sleepovers, parties, studies, love, and even a sense of freedom. However, college and initial years of working is also a time when a lot of financial decisions can go wrong, and you may end up paying for them for decades.
An important aspect of college and even your early career that is often neglected is managing your money wisely while in college. This is because you are not under the close supervision of your parents during this period. This can be both exciting as well as daunting.
Many students are unable to complete their education due to poor handling of money or due to the lack of money when they need it the most. This is because most students do not have enough savings to sail through college and do not get access to loans due to a lack of security and credit history. Although instant loan for college students and young professionals is now easily available, a better understanding of money management can help come to the rescue.
Money management is not just essential in college, but it is a skill that you will need to learn and sharpen throughout your life. Moreover, some financial habits picked in college and early professional life might stay with you forever. Therefore, learning proper financial management early can help students build a stress-free future and help them in their adult lives.
A crucial part of understanding how to handle money is knowing what not to do. There are plenty of financial mistakes that college students and young professionals make, which they pay for a long time.
Here are 15 common financial mistakes that you should avoid as a college student for a better financial future:
1. High Expenses, out of control spending
Perhaps, the most common mistake of all is overspending, where it is not necessary. It could be on luxuries such as designer clothes and many expenses that could be avoided, such as a latte from expensive cafes when a good old home-made concoction would just suffice. Control your impulse buying for handling money better.
2. Low savings and not having an emergency fund
Often, college students and young professionals do not practice the habit of saving their allowance or salary. This leads to spending everything they have and not saving for a rainy day. Having an emergency fund can not only give you a cushion of safety but also make space for some discretionary spending, such as visiting your favorite eatery.
3. No budgeting
Not having a monthly budget is perhaps one of the biggest financial mistakes that students and young professionals should avoid. Simple methods such as using an online expense manager and keeping your money in a safe place so that you are not tempted to spend can go a long way in handling money. You can also use budget calculators to ration your spending.
4. Being disorganized/ not keeping track
An extension of the budget point, as a student, you are used to keeping track of your lessons and other activities. Why not add finances to the list? Using simple apps and organizers for keeping track of your expenses is the first step to managing your money wisely. Many students and young professionals do not realize where the money was spent and end up finishing their cash before the month-end.
5. Not using credit cards wisely/ abusing credit cards.
While young professionals and even students may manage to get a credit card easily, remember, a lot of them end up piling credit card debt because they do not use these cards wisely. That is, if you can pay off the credit amount on time, it can help you build a good credit score and help you be financially stable.
6. Misusing student loans
Borrowing student loans is understandable for paying one's tuition fees. However, if you divert your student loan payouts for vacations or for partying, it is only going to lead to a bigger cash crunch during your time in college and the long run.
7. Not having financial literacy
College students and young professionals tend to think that it is too early to understand money management. However, the sooner you begin to become financially literate, the better. Understanding loan terms and other conditions before accepting them is a must to avoid debt traps.
8. Overspending on wants and not needs
A common mistake among young people is the inability to understand the difference between a want and a need. If you spend all your money on wants, you will not have enough for your absolute requirements such as books, travel, and tuition fees. Spending more on what they desire and then running out of money for essential needs is an unhealthy spending habit. Recognize your needs and wants wisely.
9. Damaging credit score
We all know the downside of non-repayment of debts on time. Late or of debt may affect your credit score drastically. It is advisable to limit your borrowing to the extent it can be repaid back on time. It is also prudent to pick from the most reliable and best loan apps in India for students to avail of instant cash loans, as they have student-friendly limits for repayment.
10. Blindly following peers
An extension to the point of need and want, sometimes, young professionals and college students come under pressure to spend where their friends are spending. Avoid this to ensure better financial management.
11. Not applying for scholarships
Scholarships take away the burden of tuition fees, which can feel like the weight of the world lifted off of your shoulders. Always apply for these to save money and not have the burden of repaying a huge debt before you even start your career.
12. Not taking advantage of free opportunities.
As a college student, there are several perks, such as discounts and freebies. Monthly gym membership on the campus itself and discounts on buying books on showing your ID can save you a lot of money. Companies even give many perks to professionals, which young professionals can use to their advantage. Many services offer student discounts; use it to your advantage.
13. Making bad investments
Making investments in avenues such as stocks based on “tips” can be a recipe for disaster. Avoid making ill-informed investments like these. Get educated on the investment you desire to make; research and study should always be done before making such investments
14. Not saving on basics.
Many students and young professionals end up overspending on basics like housing, while they could easily get on-campus accommodation or a shared rental with their friends or colleagues. Even things like bulk-buying books and other necessities, along with a few friends, can save a lot of money.
15. Exploring low-cost activities with friends
Do you think every good thing in life costs money? Think again. Begin to look out for activities that do not involve money like a fun hike to a hilltop with your friends. Time well spent on hobbies and with friends is indeed priceless.
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This is where mPokket can step in to assist them. mPokket offers instant loans for college students and young professionals through an online loan app that requires a simple online loan application. This instant loan app for students delivers the loan amount anytime, anywhere within minutes straight to the bank account or PayTM wallet.
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