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How College Lifestyles Affect Financial Success

College is a time of exploration, transition and habit development. In college, you are working on study habits and absorbing knowledge that may help you with your future career. Make sure you are developing financial habits that will best help you once you graduate, too. The following are some college lifestyle traps that many college students fall into.

SEE: 5 Ways To Combat Rising College Costs

Spending Freely
Some students see college as a chance to have fun. You're making new friends, perhaps dating, maybe fitting in some traveling, and building the lifestyle that you hope to enjoy after graduation. You want new clothes, the best electronics and a cool car. You plan on settling down after you graduate, so you aren't worried about these excesses. However, where are you getting all that money?

College and all the things that come along with it (books, supplies, tutoring, transportation, etc.) are expensive - and these things are your absolute priorities. Everything else can wait for when you are working in your new career.

While there are some people who consider "budget" to be a dirty word, it can actually be a saving grace. Much like sticking to your educational plan, you can stick to a spending plan. Consider your life as a student as living on a fixed income, and plan accordingly. Take the time to discern what expenses you have versus what your income is at this moment (don't calculate on future income that may not present itself for years - that is a particularly nasty trap).

Borrowing More Than You Need
You most likely are already going to have student loans to contend with once you graduate, so don't add to your misery by using credit cards. Sallie Mae, one of the largest private educational lenders, states that most undergraduate students have an average of $4,100 in credit card debt by their senior year. You're better off getting Plain Green Loans than incurring that amount of credit debt. Even if you are careful to make your payments, it could still take you years to pay off your credit cards. (Check out this payoff calculator to see how long.) Credit cards are not a viable option for everyday spending or frivolous splurges, especially while you are not earning income.

Speaking of splurges - your student loan money should go to fund your education. This means that you only borrow what you need, not what will make you most comfortable or fund your spring break trip to Cancun. Use your school money for tuition, books and a place to stay - that's all it's meant for. Be very careful with your student aid, and use it only for what it is intended to do: aid you in your educational costs. You may find that you don't need to borrow as much, which saves you quite a bit in the long run.

Not Saving
Saving money is sometimes difficult, especially when you're barely scraping by. You can save up by following a simple two-step process. First: Save money by not spending more than you have to. Second: Set aside that money you didn't spend in an interest-bearing account. If you find yourself juggling to keep up with your power, cable, rent, food, credit cards and all those other bills that pile on - cut back. Where can you save money without starving? Begin with your textbooks.

Textbooks cost a fortune, but there are ways around spending the new-book price for each. Most schools have a buy-back program, so begin there. Sell your used books there or make a little more selling directly through sites like Amazon.com. Now, turn around and buy all your books used. The difference in cost will astound you.

Other ways that you may be able to save: carpooling, brown bagging lunches, split costs with friends - keep looking, there are dozens of ways.

Next, consider eliminating those things that you truly don't need and can go without. You are a busy student, do you really need cable television with 200 channels? Do you have to go out every weekend? Will your educational goals be affected if you don't buy that new pair of shoes or the coolest sweatshirt in the student store? Revisit your priorities, and you'll find there is a lot of room for savings.

Missing a Payment Here and There
Pay your bills on time. This cannot be stressed enough. Your credit score depends on it and it's just a good habit to get into for life. Sure, emergencies do come up, but if you follow the advice above, you will have a bit of a cushion to take care of it.

If you have credit cards or a short-term loan, make your payments on time and pay them off as fast as you can. If you have electric, water, Internet or other utilities, always make your payments on time. Try to avoid late fees like the plague.

The Bottom Line
Follow your budget, spend wisely, save a little and pay your bills on time - learning these habits are a great way to start your post-college life on the right foot.



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