Top Financial Mistakes College Students Make

Carmina Bayombong

White man with empty wallet
The journey from the corridors of high school to the big halls of college can be an overwhelming one for some considering the many changes and transitions that go along with it. Once you enter the doors of college life, you’ll suddenly feel this sense of responsibility, freedom, and at times fear in committing huge mistakes.

Soon you’ll realize that the best lessons in life are learned from those mistakes that gave us opportunities to straighten out our tracks into adult life. One mistake we can never afford to make numerous times though are those that involve money.

For some college students who are new to city life, money management may come as an unfamiliar yet constant chore that they can’t readily assess. But once allowances start to run out and the next remittance is still a few days away, they immediately learn the struggle of grasping at anything for measly cents much like how a fish gasps when out of water. Only then will they begin to acknowledge the importance of having a budget.

College life is stressful enough as it is with loads of tedious work, sleepless nights, and cramming for exams. Whether you are a freshman in college or planning to go back to school for graduate studies, avoiding these money mistakes can significantly relieve you of that unnecessary stress you don’t really need.

Picking the most expensive school as it's always the best.

We know that many will instantly negate this, but there still are some out there who think that expensive schools offer the best education. On the contrary, there are plenty of public schools that take in scholars and provide them with quality education for lower costs, and graduate some of the best and brightest students who are fit for employment.

Last year, a study reported that most employers preferred hiring graduates from state-run tertiary colleges than those more prominent universities citing positive work ethics and quality of intelligence. This is not to say of course, that graduates from expensive schools are not bright because they are. This only means that you don’t really need to enroll in a prestigious and expensive school to be able to land a good job.

If you are granted a scholarship then, by all means, go for it, but don’t try to force yourself or your parents to shoulder higher tuition fees through loans just because you feel the need to graduate from an Ivy League-level university just for bragging rights and head-turners on your résumé. That right there is not smart at all.

Borrowing money as much as you can.

Student loans can help you and your parents survive the numerous costs of college life. Some financial assistance companies even help you with your dorm, thesis, and tech fees if you need it.

One common mistake students usually make is borrowing more than they actually need. Worse, they spend the extra money on superficial things rather than what’s necessary for their studies. Be very wary in making this practice a habit because it’s not one that you would want to nurture into adulthood.

To give you an idea of how this money mistake can haunt you for the long-term, imagine borrowing money for more than you need then facing the inevitable consequences of bigger interest rates and longer payment terms, not to mention other incidental expenses you might not be aware of yet. You’ll definitely have a more difficult time in reconciling payments.

Try not to go so deep in debt that you’d still be paying your student loans years after landing a job instead of already focusing on investments. Borrow only for the things that you need and save up for the things you want. There’s just no bargaining when it comes to that fact.

Riding out your course.

Some students face the sad ordeal of not being able to pick a college course of their choice. Instead, these students are forced to ride out their unwanted courses despite the extreme pressures.

Most student transferees and shifters who have failed or gotten debarred in college are usually those who did not pick their college courses themselves. What may result is long years in school and more wasted money.

From the get-go when you graduate from high school and preparing into your freshman year, determine and justify to your parents and yourself why you should pursue the course of your choosing. Make plans to finish and graduate without shifting courses.

However, if you have already enrolled in a particular college course but then discovered that it’s not the right fit for you, turn around and transfer to what you really want immediately and without hesitation. Oftentimes, choosing and staying in the wrong educational track can only entail more expenses for something that can also be rendered useless when you decide to pursue a different career later on.

Don’t resort to credit.

For working students who learn the importance of budgeting income and proper debt management early, college is the best time to establish a good credit rating. One thing to avoid though is how borrowed money can stack up through time. Plenty of things can go wrong if you borrow more now because you are expecting to gain higher earnings later and assume you can easily pay off debt.

Try to maintain what you borrow within a reasonable range despite your capacity to earn. If you want to gain a good credit score, you’re going to have to use your credit card from time to time. When you do, use it for expenses such as groceries or utilities that are already covered by your monthly savings. The trick here is simply to incur a small amount of debt that won’t exceed your budget and what you are earning for a better credit rating.

Are money problems stopping you from getting a degree? InvestEd is the Philippines’ leading education loan provider offering flexible payment plans suited for students like you. Learn more about it here.