Back to Blog Main

The 3 Big Financial Mistakes College Students Make

Explore three of the biggest financial mistakes students in college can make and how to prevent them.
  • Cavalry

The college years come with a newfound sense of freedom and excitement, but this also means added responsibility. Unfortunately, many college students start their financial lives off on the wrong foot, which can have a long-term impact on their financial health.

Andrew Federal Credit Union explores three of the biggest financial mistakes students in college can make and how to prevent them.

1. Never learning about credit card best practices

Credit cards are an extremely important part of adult life. Not only do they offer an obvious cashless payment option, they are also instrumental to building up a credit history. This becomes essential when it’s time to rent an apartment, buy a car or purchase a house.

One resource found college students average $3,280 in credit card debt. Credit cards are a crucial part of most people’s lives, starting from young adulthood, but things can quickly go sour if you don’t know how to use them. For instance, many credit cards have hidden terms and high interest rates. Credit card providers may entice college students to sign up for credit cards on campus, offering extras like free t-shirts. These companies know that many students will charge more they can afford, yielding interest and ultimately credit card company profit. This is a major problem for students in school today.

Many college students are never taught how to properly use their cards, so how can you prevent credit cards from being your financial downfall? Let’s start with minimum payments. If you continuously pay the minimum amount due, you will be racking up debt. Missed payments are worse—while they may seem to have a short-lived financial impact, missed payments will have a negative effect on your credit score for several years. The bottom line? Never charge something you won’t be able to pay off on the next credit card bill.

Credit card debt negatively impacts your credit score and it can be difficult to bounce back if you have bad credit from the start. If you plan to get a credit card, make it a habit to monitor your credit score regularly and work with Andrews Federal Credit Union on how to improve your credit score. Many credit card providers offer this as a built-in feature of their online card payment platform, but federal law also allows you to get a free copy of your credit report once a year through At Andrews Federal Credit Union, we’re always happy to help you select the right credit card for you.

Debit cards provide a reliable alternative to money management, without the risk of racking up debt. At Andrews Federal Credit Union, we’re always happy to help you select the right debit card for you, such as our Round-Up Savings Program, which boosts your savings even when you spend.

2. Never setting up a budget (or sticking to one)

During the college years and beyond, it’s not only critical to set up a budget, it’s just as important to stick to it. Everyone benefits from having a budget and the earlier you start, the more prepared you become for the remainder of your life. Setting up a budget will allow you to understand how much money you have and where your money is going.

There are many online tools available, but college students can generally set up a simple budget spreadsheet on their own. The biggest thing to consider when creating your budget is how are you going to save money. It doesn’t matter how much you’re able to save each week; what matters is that you save in a way that works with your budget. If you are only working part-time, save just $10 a week from your paycheck and work your budget around that number. By the time you graduate, your savings will add up, and you will be grateful you were able to save when it seemed most impossible to do so. For a breakdown of how to create and manage a budget, Andrews Federal Credit Union has you covered.

3. Spending money unnecessarily

The college years can be a prime opportunity for overspending. Students generally haven’t formed great spending habits, so learning some valuable money-saving tips and tricks can be helpful.

College textbooks are expensive! On most campuses, the student bookstore isn’t the best place to hunt down incredible deals, which is why it’s best to avoid shopping there unless you have to. There are always ways to get the books you need for cheaper. Look for your textbooks online at retailers like Amazon or Chegg and compare those prices to your campus bookstore. Often, the difference can be hundreds of dollars for all your books.

Unless it’s a book you plan to use for years to come, consider a textbook rental. Renting a textbook is a fraction of the cost of buying and if you can manage to find a used book in good condition, you just hit the money-saving jackpot. If you do get stuck buying an expensive book from the bookstore, try selling it to a retailer instead of back to your school. You may not get the full price you paid, but even if you get half of what it’s worth, you will be in better shape.

Another college money-saving tactic is to research the free amenities your school offers and use those as much as you can. Instead of getting a local gym membership, check out the gym at your school. It’s free and likely will include all the equipment you need for your workout. Planning a movie night? Instead of going out and spending $50 between admission, drinks and food, look to see if your school has a free movie night coming up (there might just be free popcorn too).

The college years are a great time to not only prepare for your career, but also to formulate smart financial habits. Don’t get trapped making these mistakes and starting out on the wrong foot. For further assistance, contact Andrews Federal Credit Union specialize in offering personalized services to our customers, including financial help for struggling college students.