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The Top 5 Money Mistakes Made by College Students

May 25, 2011

By: Adam Carroll, Phoenix-Thunderbird

Students will begin to descend on college campuses this Fall eager to begin (or continue) their 4 year break from reality that is college.  For some, a complete lack of financial preparation may have them paying for their mistakes for the next 20-25 years.  Here are the top 5 mistakes that many of these students will make:

Living their parents lifestyle at college.  When young people are used to eating at fine restaurants (or ANY restaurants, for that matter) on a regular basis, they begin to think it’s the norm, no matter who is footing the bill.  Too often, expensive habits and tastes lead to ballooning student loan and credit card balances.  

Overlooking FREE money.  Before students graduate from high school, most are exposed to the scholarship opportunities that exist.  However, many are influenced by their peers to think either a) it’s not cool to apply OR b) you have to be a brainiac so what’s the use.  While scholarships are NOT just for freshmen, if a freshman student has not successfully applied for some of the free money resources, chances are they’ll overlook those opportunities as they advance through college.  FACT: it’s as much a science as an art — if they know HOW to find and apply, they will win awards.

Having no budget.
  While this is probably the most un-sexy topic to college freshmen, the reality is the only brakes they had on their own spending were generally imposed by their parents.  Now that M&D are out of the picture (and out of the know), let the spending commence.  If there is no set spending plan in place, the likelihood of blowing through graduation money, college savings, and Grandpa’s inheritance are fairly high.  

No forced savings plan.
  There are two things that students have on their side — one is time and the other is what that time will do to the money they put away now.  Sure it may not seem like a big deal to save $30 a month out of the $3-400 that students make part-time, but the habit that is formed makes saving 10% of $3-4,000 a month significantly easier down the road.  

Keeping up with peers.  When a roommate says, “we’re all going out for pizza tonight, wanna go?” it’s difficult (if not downright impossible) to say “no thanks”, right?  As difficult as it may be, the drive to keep up with the spending power of a neighbor may put students in the poor house for the long haul.  Whether it’s dinners out, new clothes, ringtones for everyone in the address book, or “socializing”, the amount of money that a peer spends should have no impact on a student’s spending… but it does.

Editor’s Note: Adam Carroll is an author and speaker who lives in West Des Moines, Iowa with his wife and three kids. A 2007 honorary initiate, Carroll is a frequent presenter at Delta Sigma Pi workshops, including LEAD events and Grand Chapter Congress. For more information or to check out his book, Winning The Money Game, visit www.adamspeaks.com.

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