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3 financial lessons for college students

So your off to college (or going back for another year). The cars packed, the dorm room essentials bought and now its time to think about some serious stuff, MONEY. First things first as a student make sure to open up a student bank account and reap the benefits of that. 
Though college can be a great opportunity for growth and development it can also lead your down a financial slippery slope. The average graduate leaves with about $30,000 (in the US) in loans. This number are huge and something to be avoided, though more often than not buy the time the reality of the situation has hit home a lot of debt has already been accumulated. 
Today we'll share our top 3 financial lessons for college students to help them avoid these pitfalls.

1. Only borrow what you need. You may be entitled to more loans but that doesn't mean you should take them out. Whilst organising your student finance do an annual budget and see how much you anticipate spending. 

Look at the average cost of living in the city where your college is and combine this with the cost of tuition minus you savings to figure out how much to borrow. If the amount offered to you by loans is greater then consider borrowing less. 
Avoid borrowing on credit card at all costs (and your bank will try their upmost to sell you a student credit card) nor should you use student pay-day loans. If you find that you are borrowing more than you need contact you lender to amend the agreement to better reflect your financial needs. 

2. Overdraft ≠ free money. When banks sell you a student account their biggest selling point is the overdraft without fees or interest. The first thought of many is FREE MONEY!!. No such thing exists and there is a price to pay for it. Students become accustomed to this being part of their budget and treat it like their own money. But its not and you'll have to pay it back. 

Unless your super sensible with your money I would never set up an overdraft. Though you can take the money out and invest it (and earn interest which would be free money) with the super low interest rates on low risk financial products at the moment it is barely worth it. So basically give the overdraft a miss and avoid creating one of the worse personal finance habits. 

3. Look for alternative sources of income (excluding loans). Avoid at all cost student pay-day loan companies and credit cards as their interest rates are through the roof. Instead look for alternatives that bring in income without incurring debt. 

Scholarships and Bursaries are a great way to supplement your income. Though not as common in the UK they are becoming increasingly so especially if your from a low household income. They can be a little tricky to find out about but researching is well worth it if you get the scholarship as you don't have to pay the money back.  
Working is invaluable whether or not its during term time or the vacation. It boosts your CV and your bank balance. Plus keep an eye out on campus for other ways to earn. Often clinical trials will be run, or surveys needs completing, these simple tasks can pay quite well. Check out this post on boosting your income as a student



  1. I did mine through scholarships and grants, but it sounds like those might not be as readily available over there. Love the tip on borrowing only what you need... Loans are not a free lifestyle boost!

    1. So over in England you borrow from the government for tuition and living costs. Tuition is not that high and is capped, so there has been less pressure to create more scholarships (though I managed to get 3 scholarships in my law degree). The way it works you pay back what you borrowed as an income tax, dependent on how much you earn and it is wiped after a certain number of years. So although it is debt, it is a very different system to the USA. In fact they reckon many students will not pay off all their debt before it gets wiped. Because of this a lot of people see it as free money.

  2. Great tips. The real financial challenge begins when banks start offering students various discounts and incentives in order to entice them. Like you rightly said, there is nothing like free money, there is always a cost to borrowing.

  3. The only time I ever over drafted was in college and that $35 fee set me on the narrow path to never over drafting again. Sometimes fees are pretty terrible, but every one in a while, they're a good reminder you are making bad choices.