Red-headed woman in white shirt dancing and waving money around in living room

5 Unhealthy Money Habits to Avoid Developing in College

Developing smart money habits now will pay off majorly in the future. Check out these five unhealthy practices you should avoid for financial stability.

Good and bad habits can make or break you during your college days. Establishing healthy habits during your time as an undergrad will positively shape the trajectory of your future, setting you up for success for the rest of your adult life. Many college students stumble over these five unhealthy money habits during their first years as young adults. Here’s how you can avoid these financial pitfalls—after all, financial responsibility is one of the best gifts you can give yourself at this stage of life.

1. Impulsive spending

Learning to differentiate between wants and needs is difficult at any stage, but it's especially hard when you’re new to adult life. College is expensive, and the price of everything has gone up. On top of that, this is likely your first time living on your own, paying for food, textbooks, and maybe even rent. As a result, it’s really tempting to swipe the plastic your parents or dorm gave you for everything from treating your friends to dinner in the cafeteria to extra snacks and Red Bull at the convenience store. After all, there’s money pre-loaded into your account, and it’s meant to be spent, right? Wrong. Whether you’re paying your own bills or relying on family support, spending at will is a dangerous habit to form. Before you know it, you could be up to your eyeballs in credit card debt, where interest rates can get up to 28% or higher. If you’re paying for your meals using a stipend from college, it’s likely the money in your account is supposed to last you the entire semester—or even the whole school year. If you run out, that’s it, so create a plan and spend carefully.  

Related: 7 Helpful Money-Saving Habits College Students Should Learn

2. Spending student loans or scholarships on inappropriate expenses

You may feel impossibly rich when those direct deposits hit your bank account for the first time—but scholarship and loan money isn’t a fun gift. You should be very careful about how you spend it. It’s an investment in your future that’ll need to be repaid, whether through money (loan repayment) or academic success (scholarship eligibility). Federal student loans are specifically earmarked for educational expenses, so you can’t use this money to pay for a spring break trip to Cancun or a new TV for your room. In a worst-case scenario, the government could demand that you immediately pay back what you’ve already received. If you end up with loan money left over after your educational expenses have been paid, consider returning the remainder to your banking institution. This way, you lower the amount you owe, which in turn lowers the amount of interest you’re accruing on your loan.

3. Not checking your accounts on a regular basis

If you forget or don’t like to look at your bank account every month, you’re not alone—more than half of all Americans admit they’re too afraid to check their bank accounts as often as they should. Start checking it. It’s best to begin setting healthy financial habits at the beginning of your adult life so they follow you as your income increases and your financial obligations get more complex. Many banks recommend customers regularly check their accounts at least once every week or two, just to make sure everything is in order. That way, you’re informed if an unexpected bill hits or someone attempts fraud by charging or stealing from your account.

Related: A High School Starter Guide to Financial Responsibility

4. Succumbing to peer pressure

Keeping up with your peers can feel like an important priority, especially if you attend a school where everyone seems image conscious. And even if you aren’t big on designer clothing or expensive cars, your social life may come with a slew of costs such as school sporting events, Greek life, or group outings. You should participate in fun college activities, but make sure you’re not spending money you don’t have. Try suggesting alternative plans or be willing to sit out of events beyond your budget. For instance, you could pack a picnic lunch with your friends instead of eating at your favorite restaurant. And if you’re thinking of studying abroad, take some time to research and apply for scholarships specifically designed for students interested in a global focus so you have enough cash flow to cover the additional cost.

5. Not sticking to a sustainable budget 

Budgeting sounds boring, but like any form of healthy discipline, creating a responsible college budget can lead to a more fulfilling life where you don’t have to think about your money all the time. And it doesn’t mean you have to cut out all fun spending—just spread it out a bit instead. Sit down and make an honest assessment of any income and every expense you have right now, including annual expenses such as car maintenance or textbooks at the beginning of the semester. 

Next, separate your expenses into needs and wants. Once you’ve tallied up all needs, look at the remainder of your funds to see how much money you have for wants. Here’s an example: You need to pay rent and tuition, but you want that brand-new hoodie from the university gift shop. If you don’t have enough free spending money for this month after paying all your necessary expenses, try earning some extra cash or waiting until the following month to buy the sweatshirt you want. This works for bigger expenses as well; if you know you want to study abroad during junior year, start setting aside some money each month toward your goal as early as you can, even if it’s just a few dollars at a time. 

Related: Budgeting Best Practices All Students Need to Learn 

Establishing healthy money habits now will set you up for the rest of your adult life. Many college students stumble when it comes to managing their finances and learning to be money conscious. With a little extra effort, you can ease your financial fears and have a great college experience.  

Looking to make some extra cash this summer before you head off to college? Check out our blog on 4 Flexible Summer Jobs to Get Paid and Take a Break.

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