The 3 College Years Financial Mistakes That Could Haunt You

Thursday, August 23, 2012

The 3 College Years Financial Mistakes That Could Haunt You

There are many financial mistakes that later in life, are written off as simply part of “the college years.” Bad habits like never saving or spending too much on pizza and bar tabs are often brought to a halt once the real world sets in post-graduation. There are, however, certain financial risks that people of a younger age make during those college years that not only can't be written off, but make a huge impact in your life for years to come. If you're thinking about making some financial moves during your college years, pay extra attention to these three mistakes and avoid doing anything that could land you financially strapped in the future.

Financing the wrong car

Financing, in general, during college is a risky business. Financing a purchase as huge as a car is quite another story. If you have to do it, it's best to look for the absolute choice from a financial standpoint. Never finance a new car during college. Consider the expenses you are not accountable for now, and make sure to set a monthly payment low enough to sustain both during school and after graduation when life expenses will hit hard. Look at the Kelley Blue Book  value and make sure that, by the time you may want to sell the car and buy a new one, it will still be worth more, or as much as, the amount you will still own on the loan.

Paying too much for your degree

Over-paying for a college degree can be difficult to quantify. What you get out of the experience and the ways you may be able to apply that knowledge years down the road can often make up for lack of job opportunity right after you graduate. However, if you're paying five figures (or more, gulp!) for an education, you will want to be sure that you are prepared for the huge financial burden that comes with re-paying those loans after school.  

As corny as it sounds, it may be a good idea to think about the types of jobs you may want to have after you graduate and see what they're paying. Sure, things could change in the next four years, but industry standards won't fluctuate that much within such a short time frame. So, if you could afford to pay back your student loans within your desired industry before college, there is a good chance you will be able to make it once you're actually trying to use your degree.

Running up your credit

This is something that everyone needs to avoid. But college students, especially, can be susceptible to credit card abuse. Many credit card companies send people of “college age” special deals and discounts that may seem great, but are often hiding enormous interest rates and other loopholes. It's best to only spend what you have during college. It is beneficial however, to build up your credit during college, so using a credit card to do that is actually smart. Just make sure to only make small purchases. Never use it for everyday items. Plan to make automatic payments every month to start building credit.

About the author:

Pepper Givens is a freelance writer and passionate blogger who primarily contributes to Education inspires her, and she hopes to one day change the lives of students as a full-time teacher.

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