Being a college student comes with a lot of responsibility. College gives you the perfect opportunity to set yourself up for success — not only in your studies but financially.
Sure, it'd be nice to be able to go out to watch movies every night and go on expensive road trips. That sounds like fun!
But before that can happen, you must control your spending habits. Spending money appropriately is a responsibility that requires careful planning and consideration.
Just imagine going to Europe someday and treating yourself to a fantastic vacation.
Yes, you read that right.
It is possible to follow your dreams and go on fun adventures in the future. However, to make that happen, you must start making positive decisions.
Establish feasible financial goals, and you will experience long-term success!
Are you ready?
Read on to learn which five bad spending habits you should stop right away to start paving the way to a better financial future.
1. Not understanding wants vs. needs
Being able to determine a want versus a need seems reasonably straightforward, but this is something we all could work on improving.
The biggest problem lies with needing to correctly categorizing your expenses.
For example, you need textbooks, a computer, and a living place. You don't need to buy junk food to help you stay up all night studying or that brand-new video game that just came out.
You may be tempted to say "yes" to everything your little heart desires. Unfortunately, if you do that, you could go broke and drop out of college.
The bottom line is to only spend money on what you need.
Here are a few ways to save money and still have some fun without going overboard:
- Go on a picnic at school and enjoy some leftovers from the night before.
- Fly a kite instead of buying the latest video game.
- Split a pizza with a couple of friends to cut down on cost.
- Go to the matinee only for the movies you can't live without seeing in the theater.
- If possible, bike to school to spend less on car gas.
- Play games at home instead of spending money on an expensive meal and game night out.
2. Spending without having a plan in place
We get it; it's complex to plan for a future financially when you're just a student.
However, this is where it all begins.
If you're spending your money on whatever you want whenever you want, then you're headed for Brokesville fast. Perhaps you're already there.
What's the magic formula to save money?
- Try creating a monthly budget.
- Without a budget, it's far too easy for money to poof and disappear before your very eyes.
- Make it your priority to set goals so that you won’t go broke like almost every U.S. citizen.
In other words, come up with a plan and stick to it. Correcting your lousy spending habits may not happen overnight, but it certainly doesn't hurt to try.
Set small goals like these:
- Come up with a realistic weekly and monthly budget.
- Set aside a set amount of "play" money for entertainment.
- Calculate how much textbooks and other school necessities cost and where you can cut back.
- Make a meal plan each week instead of overspending on food.
- If there is any money left over from your monthly budget, invest it or put it in a savings account.
- Always know what the balance is in your account instead of losing track of what you spend.
Follow these tips and develop your own money-saving goals. Do this, and slowly and surely, you'll achieve greatness. Even better, you'll have enough saved up for an emergency.
3. Abusing credit cards
It's common for college students to have a credit card, and in many cases, it's a good thing because they can use it to build their credit.
Sadly, credit cards come with temptations that lead to spending above your means.
It's way too easy to get caught up in a cycle of debt.
If you find it difficult not to buy everything with your credit card, perhaps you shouldn't have one.
Or, if you must have one, try limiting yourself to just one credit card with a lower credit limit.
Just because you're already in debt doesn't make you a lost cause. Do what you can to kill this habit and prevent overspending in the future.
Pay off your existing debt as soon as possible and then start a system of paying off the full balance monthly.
Another thing to remember is that overspending on a credit card can negatively affect your credit score.
Why is this the case?
Well, if you can't pay the minimum payment each month or go over your credit limit, it could harm your credit.
Get a bad credit score when you're young, and it may affect your ability to get an apartment. Additionally, it turns out that some employers check credit scores before hiring someone.
We'd also like to point out that if you already have student loans, paying off your student loans and credit card debt simultaneously will be twice as difficult.
Interest rates will continue to increase over time. At first, the principal might seem low, but don't be deceived; the interest will quickly build.
If you want to live life with far less stress after college, do what you can to prevent credit card debt.
4. Using student loan money inappropriately
You may be tempted to spend your student loan check on whatever you want. Be that as it may, only use loan money for school and necessary living expenses.
Throughout college, you'll get pressured to spend a lot of money on activities such as concerts and parties.
Are you already spending your student loan money on frivolous things? Even if you are, you don't have to continue. It's a bad habit you can break.
Instead of caving and allowing FOMO (fear of missing out) to take over, set some limits on your spending (as discussed in #2).
For example, there are a bunch of concerts you'd like to go to but can't afford. Or, you may experience peer pressure to spend money on food for a game night, and then your friends conveniently forget to pay you back.
Even though it's hard, learn to say no.
Take the time to learn which activities you should decline and which situations require you to spend money.
Now, this doesn't mean you have to go through college without having any fun. It just means you have to spend wisely and use loan money only for its intended purpose.
You'll feel better knowing you're only using your money for school and living.
Making better money choices is much better than spending it all on fleeting activities that don't offer a return on investment.
5. Not keeping track of your spending
Another bad spending habit to kick to the curb is not keeping track of your spending.
Say what?
That's right; it's vital to take the time to keep track of what you spend daily.
Whether logging it on a spending app or writing it down in a notebook, keep track of where your money is going.
Chances are you'll discover you've been spending far too much money on eating out or going to the movies.
By observing your spending habits, you can learn to improve your money-making decisions in the future. Plus, creating this habit now will reinforce positive spending habits as you age.
Don't forget to log your bills because that'll also be very telling.
For example, if you've subscribed to Netflix, Hulu, Starz, and HBO, maybe it's time to only subscribe to a couple to stay entertained.
After all, you should be studying — not spending all your time binge-watching!
Are you ready to take the plunge and get your finances in order?
We promise you won't regret it.
It may seem like a lot of sacrifice right now, but it will pay off (quite literally) in the future.
Break these five lousy spending habits, and before you know it, you'll have enough money to stay out of debt and go on that dream vacation.
Deep down, you know it's essential to start saving and not spend money on frivolous activities. Developing goals and better habits now will be more than worth it in the future.
