University can be a confusing time. You’re transitioning from teen to adult and experiencing a whole wealth of new things. Suddenly, you don’t have any parents around to cook and clean for you or wait up when you’re late home. That freedom is one of the significant uni draws, but it can leave you feeling a little out in the cold when the time comes. And, that’s not the only tricky lesson you’ll learn.
You’ll also find yourself in a place between education and financial freedom. Yet, you may not have developed the money management habits which are essential to financial success. It can be a frightening time and, unsurprisingly, many students find themselves in trouble. That’s normal, and a regular part of finding your footing. You will, inevitably, stumble a few times. But, what you may not realise is that some of those falls could cost you for years to come. Running out of money, or wasting it in all the wrong places is harmless enough.
But, let’s look at a few money mistakes which could leave you paying for years to come.
Getting Into Debt
Without a doubt, getting into debt is one of the most costly mistakes many students make. With financial freedom comes the overwhelming sense that you can spend what you want when you want. Of course, it’s far from true. In no time at all, you might find that you have a significant sum building behind your name and no real way of paying it off. Of course, student loans are part and parcel of studying, but we’re not talking about that. We’re talking about the general loans which many students manage to accrue. It isn’t unusual for students to get carried away with credit cards, or turn to a payday loan company, without realising what they’re signing up to.
In many ways, it’s unsurprising. After all, during your first forays, it can be difficult to realise the gravity of choices like these. But, rest assured; debts don’t go away. In fact, they build over the years and soon snowball into something you could never hope to pay. That, on top of your student debts, could quickly knock you down.
Just as severe as the debt you’ll have to pay is the damage moves like these can do to your credit rating. This bad boy is crucial for everything from finding houses, to applying for credit of any sort. That includes a mortgage. So, ruining your credit rating at this early age will mean playing catch up for years to come. You could potentially even miss out on those all important life experiences.
So, if you do insist on playing around with credit, make sure to do it in the right way. If you take out a credit card, set up a direct debit to pay the amount in full each month. Make sure, too, to only use it for expenses you know you can afford. If you do feel you have no choice but to take out a payday loan, find a trustworthy lender, and make sure you know the procedure for payday loan complaints should you need it. It’s also crucial to keep an accurate account of all the money you owe to different places. That way, you know what to pay, and where and when to pay it.
Failing To Save
When we’re young, surprisingly few of us think about saving. It isn’t usually until we’re well into our twenties before the urge kicks in for many. But, saving from a young age is the best chance we have of affording a deposit on a house and other such adult purchases. Until that point, any spare money is ours to do as we wish with. Many opt to go out for food with additional cash, or a night on the town with their mates.
But, this is another of those financial mistakes you could spend years paying for. If you don’t have a deposit saved by the time you leave uni, you’ll face two choices, neither of which are ideal. You can either move back into the family home and save from there, which could take years. Or, you can kiss goodbye to homeownership and start renting, which will set you back extreme amounts each month. Worse, you’ll have nothing to show for the money you spend.
With that in mind, then, it’s worth setting back as much money as possible each month. It may be as little as £10, but building some semblance of savings will take you that bit closer. It can also help to budget your lifestyle as much as possible so that you have extra money to set aside. Cut down on eating out, and limit yourself to one night out a month or so. Your future self will thank you for it.
Failing To Develop A Student Debt Repayment Plan
Student debts are, undeniably, the leading financial issue students face. What’s worse is that there’s nothing you can do to eliminate this cost. Your actions will have no impact on this expense.
That said, your student debt isn’t entirely out of your control. We all have the power to develop a plan to repay that debt as fast as possible. Failure to do this would be another costly mistake. When you have no real payment plan in place, the process can take much longer. In fact, it isn’t unusual for ex-students to still be repaying by the time they reach their fifties. That’s far too much of your life to be paying for a debt and could make everything complicated. Having a family will be much trickier when every spare penny goes towards this cause.
So, sit down with an advisor, and develop a plan which sees your debts cleared in the shortest practical time. This isn’t about stretching your finances or agreeing to repayment terms you’ll never be able to meet. Instead, remain realistic about what you can achieve. Then, stick to that plan until you’re once again debt free.
Losing Your Deposit
If you live in uni accommodation, this isn’t something you’ll need to worry about. But, if you rent a house or flat from your budget, give a thought to your deposit. Deposits are the bain of many of our lives, whether for rentals, or mortgages. Many people struggle to make up that amount and so struggle ever to change their living situations. But, you’re on sound footing. You’re young, and yet you already have a deposit amount to play with. Thus, it’ll be easier to move on when the time comes. You won’t have to worry about finding money where there is none. It won’t even matter if you’ve managed to waste all your savings. Your deposit will be safe and sound until the time comes when you need it.
But, let’s not beat around the bush; many students don’t get that deposit back. If you do any damage to your current rental, your deposit will be deducted according to the costs. Do real damage, and you may lose your deposit amount, plus some extra which you have to fork out. Before you know it, you’ll be without a deposit, and without a hope of finding anywhere else. Make sure it doesn’t happen by keeping your rental in the best possible condition and finding cheap ways to repair any small niggles. It also helps to stay on the side of your landlord, and take photographs of any issues which aren’t your fault.