5 Money Mistakes to Avoid as a Freshman

By Alicia Geigel on October 1, 2021

This article is brought to you by GradGuard. We protect college students and their families from the financial risks of college life, like providing a refund for tuition or replacing a stolen backpack when your school may not. When the unexpected happens, GradGuard’s tuition insurance and renters insurance can help you get back on track.

When starting college, you are on top of the world, with everything in the palm of your hands. Gaining new opportunities, making friends, broadening your knowledge, and exploring a new town or city are all meaningful ways to make the most of your college experience. As you start college, given all of this freedom and independence, managing your money can be complicated if you don’t know where to start or get carried away with all the fun of college. Making better financial choices starts with Grad Guard, a leader in College Renters Insurance. With GradGuard, you can guarantee your personal belongings and tuition are covered when you need them.

Are you a college freshman? Looking for ways to make better financial choices? Here are five of the most common financial mistakes you should avoid as well as how to better manage your money in the process!

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1. Not Setting a Budget: Being a young adult, it can be easy to live life without any concern or worry about the present or even the future. For so many college students, adjusting to life without parental help or support can be a struggle if you don’t have the experience. Not setting a budget is one of the most common and easiest mistakes to avoid when first starting college. Getting carried away with the newfound independence, shopping around here and there, burning through savings, etc., are all ways to set yourself up for failure and stress yourself out.

You don’t have to be a financial expert, but learning how to manage your money and balance your budget will help set you up for success. Create a spreadsheet that details your weekly/monthly living costs, which can include: rent, tuition, meal plans, grocery shopping, school supplies, necessities, subscription services, and more. Break down the prices of each cost and subtract that from your monthly income or the income that supports you, and determine what you need to keep and cut out. Anca Green of Beyond Everyday Banking notes, “By creating your budget and analyzing your income, it won’t take long to realize where you are spending money and where you can cut back.”

2. Careless Spending: Another common mistake several college students make is spending carelessly on unnecessary items. We as college students, like to spend money on frivolous things until we embody our stereotype of the broke college kid. Whether we’re going out to bars with friends on the weekends or buying takeout for the third night in a row, these seemingly small purchases definitely add up. So, stop eating out and cut ties with your favorite coffee place, because all this is doing is putting a hole in your wallet. Instead of spending your money on things you definitely do not need at the moment, put it in a savings account or literally a piggy bank to keep you from spending. This little bit of money here and there will help you in the long run when you’re paying off debt or when you need an emergency fund.

3. Mismanagement of Student Loans: So many students, including myself at one point, don’t understand the ins and outs of student loans. For most college students, the process is as simple as applying for the loan, signing the paperwork, and starting classes. It truly is that simple! When the process of getting student loans happens so quickly, it’s easy to look over the important details of what doing so means, or how to best manage them.

While in college, most students are under the impression that the loans don’t have to be paid until 6 months after graduation, which is true, but that doesn’t mean you can’t start while you’re still in school. Throughout your four or more years in college, interest is accruing on your student debt. This interest, though it seems small, adds up significantly over the course of your time in college. Consider making interest payments while you are actively enrolled to help lessen the burden of your debt once you graduate.

4. Deciding the Wrong Major: One of the biggest, if not the biggest, decisions in college is deciding what you want to major in. While everyone has big dreams and aspirations of what they want to accomplish, the job market and post-college life does not always align with those goals. When deciding your major, be sure to look into what is most realistic for you, in terms of the workload you can manage, the job market of careers for your major, and the cost of attending college (with your major in mind).

Several students leap into college without considering these factors and end up being disappointed post-graduation when their career doesn’t take off. Keith Denerstein of Ameritrade writes, “Incoming college freshman should evaluate their career goals, stay in tune with their passions and assess the lifestyle they aim to have in the future. All of these things, along with their learning aptitudes, will help shape the majors they pursue.”

5. Not Utilizing Student Advantages: Going to college has its fair share of benefits, outside of the most familiar one being higher education and better-paying jobs. Those benefits are mainly enjoyed after graduation, but during your time in college, there are plenty of student perks to take advantage of. So many students make the mistake of paying for gym memberships, magazine subscriptions, Starbucks, and other restaurants, when they can get things like these for free just by being a student! Most college campuses have fitness or gym centers, health centers, and libraries. Look into these places to avoid spending unnecessary money on what you want!

Additionally, you can save money on several different things with your student ID. Kristen Kuchar of Money Crashers suggests, “With your student ID, you can score discounts on public transportation, memberships to organizations, restaurants, shopping, and tickets to plays, movies, concerts, ski resorts, and sporting events.”

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Image via Pexels

Parties, tailgates, shopping, take-out food, etc. can all be weak areas for college freshmen to slip up financially. As a student, it can be easy to make careless financial mistakes, but with a little planning and thoughtfulness along the way, you’ll be bound to have better control of your money and carve out a steady future for yourself!

It’s no secret that college costs a lot of money. Make sure your investment in higher education is protected with GradGuard. Our affordable tuition insurance and renters insurance plans are specifically designed for college students. Customizable plans make it easy to protect your tuition, room and board, laptop, bike, and so much more.

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