Thursday | February 09, 2012
Three Student Money Mistakes to Avoid
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By
Sanyika Calloway Boyce
30 March 2006
The good, the bad and the truth (which isn’t all ugly) about being a student is that there will be an overwhelming desire for most of you to want to live like a college graduate long before that day has come. As a college student I made quite a few money mistakes that cost me tons of money and loads of headaches. Here are a few things you should know about and avoid.
Mistake #1: Living Large Without Being in Charge
According to the National Foundation for Credit Counseling News, one out of every four college graduates returns home to live after college, citing lack of income and an inability to make it on his or her own as the primary reason.
I find that many students are caught in a tug-of-war that consists of too much freedom and too little responsibility, so even if your parents have agreed to cover all of your bills while you’re in college that doesn’t mean that you should think of it as a free ride, because college won’t last forever and sooner or later you’ll run outta gas.
Take Kara for example. She came up to me after one of my presentations to ask for my advice on a problem she found herself facing. For the last three years her parents paid for her tuition, books, off-campus apartment, car payment, car insurance and cell phone bill. She was required to buy gas, clothes and whatever else she wanted, and she was quite comfortable with that arrangement.
As do many adults, Kara’s parents never imagined that they’d be making less money. In fact, few of us enter college with the expectation to make less in the future than we’re making right now. However, due to an illness that led to a prolonged period of unemployment for Kara’s dad, she found herself faced with the reality that her lifestyle outpaced her income and was putting a strain on her parent’s resources.
The truth is that life happens to the best of us and even the most thought out plan can come unraveled at the seams. So before you move off campus or buy the most expensive car on the lot, ask yourself what would happen if you had to pay for everything you have all on your own. It’s a sobering question I know, but it’s one that’s best answered before you find yourself in the middle of a cash crisis.
Mistake #2: Not Having a Spending Plan
Budgets SUCK. There, I said it! It’s true—budgets don’t work because we tend to operate from extremes. So when we think of a budget, we think restraint, discipline and not having “permission” to get what we want. So we shy away from anything that puts us on such a restrictive leash. Being a college student means you want as much freedom as possible over your life and the choices you make.
You probably have tried to live on a budget many times before and failed. I have, too. It wasn’t until I figured out that what I really needed was a spending plan that my attitude towards money changed. A spending plan tells your money where to go instead of wondering where it went; it’s very cool and super smart, too. This subtle shift in thinking will take you from dreading a budget to a place that gives you what they want most…CONTROL. If knowledge is power, then applied knowledge has the power to give you the freedom to make smart money decisions.
Mistake #3: Living by the ATM Alone
According to a Consumer Federation of America study, banks charge 11 to 32 times their actual cost to process a bounced check, and generate $5.2 billion a year in revenue from bounced checks. WOW. That’s a hefty price to pay for not knowing your available balance.
The blessing of doing almost all of our shopping electronically is convenience and ease, the curse of having such convenience is that there are a large percentage of students who think they don’t have to balance their checking account if they didn’t actually write a check. Wrong.
Even if you make all of your purchases with a debit card and pay all of your bills online, you’ll still need to know what’s going in and coming out of your account. The only way to do that is to keep a running total of your transactions.
It’s easy to forget to factor in bank fees, transaction fees and service fees when you’re taking advantage of the convenience of using a debit card. But always keep a mental tally (or better yet a written one) of your purchases because it could take up to five business days for some transactions to be deducted from your account. So the available balance listed on the ATM receipt may not reflect transactions that are still pending.
The truth is that most of us don’t wake up in the morning with the intention of making bad money choices; I sure didn’t. So if you’re reading this article you’re on the right track. Just knowing that there are some money mistakes you need to avoid is half the battle in steering clear of the financial landmines that’ll sidetrack your future success.
Sanyika Calloway Boyce is the author of four books. She travels nationwide to educate, empower, entertain and enlighten students about money, credit and debt. This former debt-strapped college student shares real and relevant money messages that young adults can relate to and understand. Visit her online today at www.financialfitnesscoach.com
© 2008, Young Money Media, LLC. All rights reserved.
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I can empathize with your new client. As a child, as for many years as an adult, I had no real confidence in myself, regardless of accomplishments. When I was a child, my parents tried to teach me the lesson of the ‘Little Engine That Could.’ As you recall, it could because it though it could. Whenever they told me that, I say: “but I don’t think I can”, as that was a far as it ever went.
When I was in college I read a science fiction novel in which the main character (if I recall, I don’t really remember the details) was consumed by fear. So he learned this small poem, which I memorized and said it over and over to myself:
“I must not fear.
Fear is the mind-killer.
Fear is the little-death that brings total obliteration.
I will face my fear.
I will permit it to pass over me and through me.
And when it has gone past I will turn the inner eye to see its path.
Where the fear has gone there will be nothing.
Only I will remain.”
Recently I looked it up. It is from a book by Frank Herbert in the Dune series. Regardless of its origins, it really helped me; it helped that I memorized it and repeated it to myself a million times a day.
Well, there are other things that helped my in conquering fear and in ability to be confident, but that was one of the first steps.