Many students deal with credit card offers, bills, loan offers, spending temptations, and budgets for the first time when they go to college. In a small way, it's like being in the real world, since the student is responsible for all of the money. With this new responsibility, many students have to make very important decisions about how to spend their money. Without the right planning and budgeting, it's easy to make mistakes.
Common Mistakes with Money
Most people who are just starting out with money don't keep track of their spending, aren't aware of credit card purchases, spend all their money in one place at once, or write checks that bounce.
One of the most common mistakes people make with their money is that they don't keep track of where their money goes when they spend it. In a typical situation, a college student would use their debit card to buy snacks at the campus bookstore or convenience store. Even though it's convenient to use a debit card and the items cost between $5 and $10, if you do this every day, those dollars will add up. A student makes his usual trip, but his card is turned down because he doesn't know how much he's spent. The student can't believe it and wants to know where all the money went, so he goes to an ATM. He finds out that his account is overdrawn and that he spent between $200 and $300 on snacks alone. This mistake is easy for a lot of people to make because there are so many single purchases. But if you are not careful, these small purchases can add up to a lot of money.
Not being aware of what you're buying with a credit card: Credit cards are tricky because they make it quick and easy to spend money you don't have. The worst thing you can do is use that credit card every time you buy something, even if it's just a candy bar or a bag of chips. Just like the money in your bank account, these costs, like minimum monthly payments, will add up to a lot of money. Your credit score could also be affected by the fact that credit cards have a credit limit. If you get close to or reach that limit, your credit score could go down.
Spending all their money at once in one place: If all their money is spent at the beginning of the semester, they might not have enough when they need it in the middle or at the end of the semester.
Checks that don't clear: If you write a check for more money than you have in your checking account, you have bounced a check. There will be what is called a "overdraft" because of these checks. Banks will charge anywhere from $20 to $30 or even more for each check that is written for more than the account can cover. This can add up to a lot of money. If other banks find out about your past overdrafts, they might not give you an account.
