Most common mistakes made by students in terms of finance
Many people often complain about their student loan repayments or credit card payments. There are some people who do not have their own house because of their overwhelming debts. We need to spare a thought and see how college students are going in the wrong direction.
You cannot sit down and teach a young person how to manage his personal finance. This is something that he will have to learn on his own. Over the period of time, with experience, he will come to know how to use his credit, interest, debt, saving over the period of time.
A good number of college students do not understand the consequences of excessive use of credit cards. An average undergraduate had four credit cards with a debt of $2000. Seniors had the highest balance, perhaps because it was adding with interests and fees over the period time. His average debt amount was close to $5800. They simply don’t realize that by the time they end up paying the full balance, it will be close to some $40000. That makes credit cards the first mistake made by college students.
The second mistake of the college students is the precious student loans. Many parents think that those loans are going to college expenses. But in fact, many students use it for other personal expenses, like buying a TV or a fridge for personal use.
The purpose of student loans is to fulfill tuition, room, board and book expenses. It is not suggested to take out more than required. If you have extra money left, you can invest it in a nice money market account and that will be useful for your next semester’s expenses.
A large number of students are not able to handle their student loan payments. There are some who are paying more than $400 a month on these loans. When you take out these loans, you pay it back in 20 years, so take them out wisely.
The third common mistake made by many college students is excessive use of credit cards and student loans. As a result, it is tarnishing your credit scores. Therefore it is important to use your credit wisely.
Your credit card debt is something that will follow you for the most of your life. If you have used your credit card too much and don’t pay it on time, you will have a hard time in getting new credit, maybe a car loan, or a home loan. In some cases, many people have a hard time in finding a job. Hence, you should know all about how to use your credit and what affects it.
Many college students find it tough to live on a fixed budget. In fact many students feel that if you are budgeting, it means that you will never have fun again. Budgeting is not a restraint; it is a good planning tool for your healthy future. You have to learn how to handle your money in the best possible ways. This will not only help you in your college days, but for the rest of your life. If you can use your finances properly, you will not only pay off your student loans in time, but also save for your retirement.