5 Financial Mistakes to Avoid When Returning to College
Expert Contributor
Thinking about returning to school to get your bachelor's degree? Or maybe you have your sights set on a career switch that requires a master's?
If you're considering a return to post-secondary, it's probably with the intention of bettering your career or your finances. To achieve these goals, it's important that you make wise financial decisions while attending college. Here are five financial mistakes you will want to avoid when returning to college.
1. Not Having a Budget
With the added costs associated with college, it's important to be conscious of what you can and can't afford. Without a budget, it's easy to lose control of your money. While going to college to improve your job prospects can be a smart financial decision, it can also result in serious problems if you are not managing your finances.
How to Create a Simple Budget
Creating a budget doesn't have to be complicated. It can be as simple as recording your income and expenses on a sheet of paper:
Record Your Income
On one side of the paper, write down all of your income sources (full-time job, side hustle, spousal support).
Record Your Expenses
On the other side of the paper make a list of where you spend your money. In addition to your regular expenses like rent, groceries, and insurance you want to include all of the new expenses associated with college (tuition, textbooks, gas for your commute, parking).
Subtract Your Expenses From Your Income
To determine how much money you have remaining perform this simple equation (income - expenses =). If the number is negative, this means you are not bringing in enough money to cover your expenses. It's time to see what you can cut from your budget.
Or for additional help with budgeting, there are some great tools you can use:
- - a free app that allows you to track your spending, customize your budget, and set goals
- .
EXPERT TIP
You can use the U.S. Department of Labor's scholarship search and use keywords to seek out targeted scholarships to apply for.
3. Overusing Your Credit Card
Even after applying for financial aid and scholarships, you might find you need more money to cover the cost of college. While it might be tempting to use your credit card to fill in the financial gaps, avoid doing this. The last thing you want is to graduate with a maxed-out credit card (or two or three) and a ton of high-interest debt.
Credit card companies love to target college campuses. However, in 2009, the that allow you to start investing with as little as $5. If you are a new investor, you can follow these simple steps to get started.
- Open an investment account.
- Choose where you want to invest your money. Consider low-cost index funds or exchange-traded funds (ETFs).
- Invest consistently.
- Don't panic and sell in response to market fluctuations.
- Adopt a long term investment strategy and stay the course.
EXPERT TIP
There are several micro-investing apps that allow you to start investing with as little as $5.
Take Control of Your Education and Your Finances
Going to college is exciting and can be life-changing. However, not managing your finances while going to school can result in poor credit, large amounts of student debt, reduced savings, and interrupted investing. All of these financial decisions can have a drastic impact on your future. Poor credit can prevent you from becoming a homeowner, purchasing a car, or getting a small business loan to propel your entrepreneurial endeavors.
Large amounts of student debt can be consuming and prevent you from achieving other financial goals. Letting the cost of school get in the way of consistent saving and investing can put you in a precarious position should an emergency arise and can prolong your dreams for a comfortable retirement. Luckily, you get to decide how you take control of your education and your finances.