7 Bad Spending Habits to Kick in College
It’s way too easy to get locked into bad spending habits when you’re young. High school does little to prepare you for the temptations and realities you will face. Ideally, parents will pick up any remaining slack, but with most people living lives in debt, students going to college can’t really count on that either.
In the following article, we’re going to discuss what you can do to cut off bad spending habits at the pass. Before we go there, however, it’s important to understand why now is the time to learn these alternative behaviors.
Why Now Is the Time to Be Vigilant
Student loan debt is what most people talk about when discussing the plight of the modern student. Unfortunately, the emphasis sets you up to fail because you have a lot more temptation coming at you now than at any previous time in your life. (And probably less experience for how to do it.)
Here are the top reasons why you should prioritize getting rid of bad spending habits now rather than later. If you’re guilty of any of them, make note. A big part of overcoming is awareness, so call yourself out!
Inexperience Makes You Vulnerable
A lack of knowledge regarding how to manage your finances makes you vulnerable to others willing to take advantage. That’s why you see so many credit card companies focusing on college campuses. They know the prospect of “free money,” or “buy now, pay later,” is too tempting to students who have independence for the first time in their lives and no ready means with which to enjoy it.
You Have Nothing to Prove
People don’t expect a lot from you when you’re a college student, at least in the first couple of years of your undergraduate work. This is a good time to surprise them while expectations are low. It’s also a good time to seize opportunity as it arises, and that’s tough to do when you are drowning in debt.
Acting Now Sets You Up to Succeed
Acting while your debt is still low or nonexistent will give you the chance to set the tone and get things done without racking up a lot of debt before you’re in any position to pay it off. Starting while you’re ahead of the game will give you the chance to do things like establish emergency funds and invest.
Now that you know why it’s time to stay on top of this, here are the 7 bad spending habits that are going to most likely derail your plans to be responsible. Knowing what they are ahead of time will give you a proper way to address each one.
1. Keeping Up With the Joneses
There is a temptation at this point to look around and see how others are spending money and enjoying themselves outside the classroom. That’s common, but don’t give into it. Nothing will keep you from reaching your goals faster than putting up financial roadblocks at every turn.
Question yourself before anything and everything you buy. Do you need that Starbucks run or not? Never do things because you saw other people do those things and thought it was cool. Maybe it was cool, but it’s a lousy reason to jump the gun spending money that you don’t have.
2. Buying Now and Paying Later
The “buy now, pay later,” is tempting but should be avoided at all costs. There are some simple reasons why this would be the case. For starters, it comes with an interest rate (usually a high one in the 20-30 percent range) if the debt is not paid off at the end of the month. If you’re buying something like a $500 PlayStation 5 that you’re not ready to pay off for a year, then that $500 purchase can become a lot more.
Worse, you could get into the habit of making the minimum payment. This won’t allow you to make any progress and will many times actually grow your balance as you continue to struggle with finding money to whittle it down.
3. Not Saving Because You Think It’s Impossible
Another of the worst spending habits you can possibly instill is refusing to save money just because you don’t feel the money is there to do so. As human beings, we waste money. It’s in our nature. Unfortunately, we often don’t notice what we’re wasting until we’ve had time to sit down and look at our finances.
Services like Acorns will give you a chance to save pennies from every dollar provided you give them permission to track your data and accounts. Acorns has been established long enough that it can be trusted. It’s not the only source that does “round-ups,” though. The great benefit about these things is that they make the savings unnoticeable to your bank account and build up over time.
4. Borrowing Money to Live On
Some of the worst advice I ever received as a student was to borrow money to live on because the interest rates were so agreeable at the time. “It’s like free money, son. (Thanks, Dad!)”
Nothing is free. You might be able to get a good interest rate on a student loan, but don’t count on borrowed money to be your key to financial freedom. There won’t always be a person
5. Refusing to Budget
Not having a steady source of income, as many students do not when they are going to full-time classes, can make you feel like you’re not in control. Lack of control leads to an unwillingness to look at or even think about your finances. This is a mistake.
The less supervision you place on your spending, the more you’ll do it. When you have no revenue coming in to combat it (or the revenue you have is sporadic and unpredictable), this can be a recipe for disaster. Take time to create a budget even if you feel like you don’t have control over what you earn. The simple act of budgeting will give you a good handle on your expenses.
6. Party Over Planning
Planning what you have to study or the homework you’ve got to do or the project work that needs to be done by later in the semester is important. Beyond that, it’s exactly why you come to college in the first place! So why spend two or three nights a week at parties where the chances of doing your best work are null and void?
Every college campus has a weekly party night. For yours truly, it was Thursday night as many took advantage of closing out their Tuesday and Thursday schedules or simply wanted to celebrate the day of classes they planned on skipping in the morning. Find out when your party night is, and avoid it like the plague. It will lead to bad decisions, expenses you can’t afford, and put you behind the 8-ball for getting through college with your GPA intact.
7. Letting Your Guard Down When You Fall Into Money
Stimulus checks, tax refunds, overage in your account due to grants, loans, and scholarships — as hard as times are, there will be moments when you fall into money. As those moments occur, it’s important to act like they did not.
Letting your guard down and working up “splurge excuses” will only cause you to spend money frivolously that could have handled a necessary expense in a few short months (car tires, anyone?). It can seem a tad Draconian to be that hard on yourself financially, but the long-term rewards of planning will give you a lot more financial freedom as you get older.
Also, don’t fall into the “you’re only young once” trap and other key rationalizations. They are there to make you feel good about bad decisions. Once that occurs, it’s easier to make more. But it’s not so easy to get out of the mess you’ve made for yourself at that point.
These Bad Spending Habits Can Set You Back a Decade
By looking at bad spending habits now, you can avoid them in the future. It won’t make it easy, but it will make it doable. Try to read back over each one to see how you might be able to avoid them with more positive, growth-minded approaches. And if you have any bad habits you’re struggling with, be sure to share them with us in the comments section below.
[Featured Image by KEDM]