A US educator report revealed that 43% of Americans who received college education admitted incurring different debts. This is quite concerning, mainly because it indicates a more profound problem that few might discuss. It's important to understand the common financial problems for college students.
Below are some of the common possible reasons this happens to several college students. Hopefully, you will be adequately prepared when going off to college.
Misusing credit cards
One of the most wonderful times to start building an excellent credit score is during the college years. Unfortunately, not many college students realize the significance and therefore pile up debts on their credit cards. Moreover, the data suggest that several students decide on credit cards without giving much thought to the types and offers available.
As a college student, it would be in your best interest to exercise utmost discretion on the credit cards you go for. The best way to do this is by using online services like Compare Credit in order to make the smartest financial choices.
These services will help you to choose lower interest rates in whatever line of credit you are applying for. Keep in mind that when your college debt continues to pile up, it can have a ripple effect on your ability to apply for a mortgage, car loan, and so on.
Failing to stick to a basic budget
Having a budget ensures that your spending is within limits and does not exceed a set threshold. Admittedly, this can be difficult to do in college, especially when little financial responsibilities can creep up on you. For example, purchasing more textbooks, school supplies, etc., can pile up and cause you to exceed your basic budget. However, now is the time to learn to live within your means and ensure staying within your financial limits.
This can be pretty challenging to follow, for starters, but there is a way to go around it, according to financial experts. First of all, it would be helpful to set limits on specific activities like entertainment. Moreover, if you learn how to cook simple meals, you can save more money. Sometimes, the best way to understand this is to seek advice from a close friend or sibling who has already gone through college. With their experience, you can pick a few pointers on how to stick to your basic budget.
Misappropriating financial aid money
For many college students, the allure to misuse financial aid funds is incredibly high. This usually happens when your college account balance is less than the money received in aid. A better option is to save the excess as your college emergency funds instead of wasting it. In the unlikely event that this money is not used by the end of your college years, it could help pay off your student loan. Now that gives you some much-needed breathing room.
Despite the freedoms that come with college life, you do have a responsibility for your finances. The number of college students piling up debts in America keeps climbing, and it would be helpful to take deliberate steps to avoid adding to the statistics.