Updated June 19, 2019

23 Things Money-Smart College Students Do

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People go to college to learn new things and prepare themselves for a career. What they have trouble finding – if they bother looking at all – are the ground rules of personal finance. Those who figure out how to take control of their cash are better off once graduation rolls around and those student loans come due.

Educating yourself about basic things like credit, debt and savings can help you prevent making some money mistakes that could hurt you years after graduation. Be one of the smart ones, and read our rundown of the 23 money missteps you won't catch financially savvy students making.

They Don't Make Poor Spending Decisions

Shopping in Market! Market!
Shopping in Market! Market! © Roberto Verzo (CC BY 2.0) via Flickr

  • Mistake #1: Getting hit with excessive bank fees

    Bank fees are one of the most avoidable things you can waste money on each month, but that's a lesson many undergrads learn the hard way. Instead of just plopping your money down in the first big-bank checking account you come across, you should be on the hunt for a low or no-fee student account. They usually don't require a huge initial deposit, and the bank won't charge you an arm and a leg in maintenance fees to keep your account open.

  • Mistake #2: Spending without a budget

    For some college students, grasping the concept of living on a budget is about as difficult as deciphering higher math. Simply put, they just don't get the concept that they can't spend more money than they actually have. They typically end up dead broke all the time or, even worse, buried in credit card debt. Putting together a basic budget lets you see what you've got coming in and going out so you don't end up in the red every month.

  • Mistake #3: Letting "FOMO" dictate their spending habits

    Many Gen Yers are battling their spending struggles with FOMO, or fear of missing out. Their social media feeds are bombarded with images of their classmates having fun and buying up the latest gadgets, and that's when the FOMO factor kicks in. To fend off that feeling, let your spending choices be dictated by your financial goals - not peer pressure.

  • Mistake #4: Not keeping track of spending

    College puts a lot of demands on your time, so monitoring your spending may understandably be the last thing on your mind. But you're setting yourself up for a major budgeting fail if you don't pay attention to where your money is going. You could get fancy and use spreadsheets or buy budgeting software, but going low-tech and writing everything down in a notebook works just as well. The important thing is that you're in the loop about where every penny is going so you're not surprised when nothing is in your wallet at a critical moment.

  • Mistake #5: Overlooking student discounts

    Your school ID card is more than just a piece of plastic with your face on it — it's also a great way to cut down on what you spend. If you're not using yours to score some freebies, you're going to end up flunking Money 101. Whether you're going to the movies or shopping around for car insurance, your ID card can be the key to snagging some big savings.

  • Mistake #6: Overpaying for everything

    One aspect of going to college that most students dread is having to shell out big bucks to purchase textbooks. If you're not using sites like Half.com or Amazon to sniff out a better deal, the odds are good that you're going to pay more than necessary. When it comes to buying textbooks, a new laptop or even just a tube of toothpaste, it always benefits your bottom line to shop around.

They Don't Skip Out on Saving

  • Mistake #7: Underestimating the importance of an emergency fund

    Money-wise students know that even if things look bright and sunny, a rainy day will come along sooner or later. When you've got no cash on hand to handle an unexpected expense, it can send you into panic mode. Squirreling away all your extra nickels and dimes can keep you from sinking when those inevitable storm clouds roll in.

  • Mistake #8: Saving without a goal

    Saving money is kind of pointless if you don't have a plan for how you're going to spend it. Without a clear goal in sight, it's easy to get sidetracked and spend the money you were planning to set aside on something else. Figuring out what you want to achieve with your savings gives you a finish line to work towards and an incentive to keep going.

  • Mistake #9: Choosing the wrong savings vehicle

    Stuffing extra cash under your mattress or keeping it all in your piggy bank may make you feel like your money's safe, but you're basically stunting its growth. It's hard to find a high yield savings account these days, so look for places where you can accumulate a decent amount of interest. You may need to put your money in more than one spot to give yourself a cushion against changes in the market.

  • Mistake #10: Forgetting to pay themselves first

    Your money isn't going to save itself, so you have to make socking it away a priority. Instead of waiting to see how much money you've got left over at the end of the month, get into the habit of funding your savings first. If you don't, it's a safe bet that you'll end up spending all your cash and not being able to save anything.

  • Mistake #11: Thinking they can wait to save

    When you're young and just starting out, you probably think that you have decades ahead of you to start saving. But it's not something you can realistically put off forever. If you've managed to score a paid internship or a part-time job that pays a decent amount, you really have no excuse not to be saving now, even if it's just a few bucks a week.

They Don't Abuse Their Credit

Triple AmEx Bonus Round!
Triple AmEx Bonus Round! © Eric Mueller (CC BY-SA 2.0) via Flickr

  • Mistake #12: Being oblivious to the value of good credit

    When you're ready to head out into the real world and launch your career, the first thing employers look at is your resume. If it's on the thin side or your work history is spotty, you probably won't be getting many callbacks. The same logic applies when it comes to your credit. If you're sloppy with how you manage it or you have no history to show potential creditors, you're going to end up paying the price when you try to buy a car or get a mortgage down the road. You'll likely have higher rates or, worse, get rejected.

  • Mistake #13: Not understanding how credit scores work

    Your credit score is the three-digit number that lenders use to decide how much of a risk you are when you apply for new credit. Credit scores can go up or down, based on how much debt you have, whether you pay your bills on time, and how long you've had credit. Students who are clued in to how credit scores are calculated understand how their financial choices affect their credit-worthiness.

  • Mistake #14: Applying for every card out there

    Once you reach the magical age of 21, you're officially able to apply for a credit card of your own without needing a co-signer. The mistake that students tend to make is applying for a bunch of cards all at once to increase their odds of getting approved. Each application results in what's called a "hard" pull — the credit card company's inquiry into your background — and a high number of these can ding your credit score. Picking just one card that's the right fit can minimize the damage.

  • Mistake #15: Pushing credit cards to the limit

    When you're spending less than you earn and building up your savings, you shouldn't have a lot of credit card debt, or any at all. Maxing out your cards while you're still in college is a bad idea on several levels, especially if you're pushing your balances beyond what you can reasonably afford to pay each month. You're also putting a pinch on your credit score when you charge close to the card's limit.

  • Mistake #16: Forgetting to pay bills on time

    Students who have financial know-how understand why paying your bills late is a bad move, especially when the bill in question is a credit card. The more late or missed payments you rack up, the more your score suffers. And you'll likely have to pay a fee every time, plus possible interest charges.

  • Mistake #17: Only paying the minimums

    Paying just the minimum due on your credit cards each month is only a good idea if you want to throw away hundreds of dollars on interest without making a dent in your balance. Even if you're not a math major, it's pretty clear that paying interest on the things you buy doesn't add up to good financial sense.

They Don't Drown Themselves in Debt

I'll be in Debt with Student Loans for the Next 20 Yrs.
I'll be in Debt with Student Loans for the Next 20 Yrs. © digboston (CC BY 2.0) via Flickr

  • Mistake #18: Taking on student loans without researching their options

    Student loan debt has skyrocketed over the last few years as more students are borrowing to cover their education costs, but it's not the only way to pay. Scouring the web for scholarship and grant opportunities, signing up for a work-study program or taking on a part-time job are just a few things you can do to earn your degree as close to debt-free as possible.

  • Mistake #19: Borrowing more than they need

    Just because your lender says you qualify for the maximum loan amount doesn't mean you should take it, but that's a mistake students make all too often. Once you graduate, you'll have to pay back every penny plus interest, so you're better off keeping what you borrow to a minimum.

  • Mistake #20: Using loan money to pay for anything frivolous

    While taking out more loans than you really need is probably the worst thing you can do while you're in college, using the money to pay for your basic living expenses isn't far behind. You're supposed to use your loans only for education expenses, but the definition of what qualifies for such expenses can get fuzzy when you need to live off campus to get your education. And it's easy to be tempted when the payment due dates seem far away. But those dates will come due and they'll have interest rates tacked on, so follow the smarties and be conservative when it comes to spending that loan money.

  • Mistake #21: Waiting to start paying on their loans

    Federal student loans allow you a six-month grace period from the time you graduate until the time your first payment is due, but unless you're completely broke, there's no reason to wait to pay. Even if you're just throwing a couple bucks a month at your loans while you're still in school, you can chip away at the principal and potentially speed up your payoff time.

  • Mistake #22: Not estimating monthly payments

    You wouldn't buy a car or a home without looking at the monthly cost, and the same rule goes for student loans. Waiting until your grace period is just about to expire to figure out how much your payments are going to be could cause a panic attack if they're higher than you expected. Use a student loan calculator to get a ballpark figure of what your payments will come out to and see if you should adjust your budget.

  • Mistake #23: Thinking that having debt is the American way

    When you're thrust out into the real world on graduation day, saddled with student loans, it's natural to buy into the notion that debt is just a way of life. Having a loan or access to credit can be useful when you have expensive but truly necessary purchases in front of you — your education, your car, and, one day, your house. But the intent should never be to drown in it, shrug your shoulders and think that everyone else is in the same situation. Always strive to dig your way out of it, seek alternatives before taking on more of it, and shop your options to make sure you're always getting the best deal and the lowest rates.

Rebecca Lake is a journalist at CreditDonkey, a credit card comparison and reviews website. Write to Rebecca Lake at rebecca@creditdonkey.com

Note: This website is made possible through financial relationships with some of the products and services mentioned on this site. We may receive compensation if you shop through links in our content. You do not have to use our links, but you help support CreditDonkey if you do.

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