We take a variety of classes at college—English, biology, psychology, history. These classes prepare us for our careers and make us all-the-more smarter, but there’s one lesson many of us learn the hard way– How to manage our money. So, for your first lesson in finance, here are some popular misconceptions college students have about money.
Misconception #1: “I Don’t Need a Budget”
In order to know what you can spend, you have to know your income. If you are spending more than you are bringing in, you will be in debt. A budget is a simple way to manage finances and to keep yourself on track. It doesn’t have to be complicated—just a simple outline of your expenses weighed against your monthly income.
Misconception #2: “All Websites are Secure and No One Can Get My Personal Info”
This is the biggest fallacy of them all. There are secure sites for purchasing, but if you do not have a proper firewall or computer protection, your credit card information could be leaked or hacked by anyone. You can never be too cautious about which sites you are visiting and what information you are giving away. If you are making a purchase online always be sure there is a little “lock” on the bottom of your screen. This helps you determine if the site is secure.
Misconception #3: “I Don’t Have To Check My Credit Score. I’m Sure It’s Fine!”
You should check your credit report and credit score annually. You can get your free credit report at annualcreditreport.com and you can purchase your score for about $8. Also, be sure to get your credit report from all three credit bureaus–TransUnion, Equifax and Experian. Each report may have conflicting information.
When you miss payments on credit cards or build uncontrollable debt, it lowers your credit score. It may not affect you at this instant, but after college when you are ready to buy a car or house, you may not be approved for a loan or you may receive a very high interest rate. Things that can determine your score include your monthly payments and if you pay them on time, how many credit cards you have applied for in the past few months, outstanding parking tickets (yup—you read correctly), and financial obligations/other bills.
Misconception #4: “I’ll Just Charge Everything And Pay It Off Later!”
Sometimes it is just too easy to use plastic. So before jumping to your cards, ask yourself, “Since I don’t have cash, do I really need to make this purchase?” If the answer is no, don’t buy.
Misconception #5: “I’ll Start a Savings Account When I Start Working– Not Now”
Open a savings account NOW and put a little money away each week. Savings accounts have compound interest and it adds up. Before you know it, you will have money saved away to use for a worthwhile investment.
How do you save your money? Have smart-money tips to share? Leave a comment below.