College students typically make at least one of these common mistakes: not tracking their money, not saving and not using credit cards wisely.
Tracking expenditures helps people, whether in college or not, see where their money goes each month, It also helps them see how much they spend on items they don't really need -- and how much they can save by foregoing those.
A checking account is a good way of both tracking money and planning a budget. While it helps students get used to recording their expenditures, they still need to keep a record of cash spending to get an accurate picture of their finances.
Setting and following a budget often uncovers some money that a student can put in a savings account for emergencies, vacations or a new car. Many people who don't have emergency funds end up using credit cards for unexpected expenses, upping such events' total cost considerably over time.
A concrete budget helps students know how much they need to set aside for bills and groceries every month. This is where tracking money comes in hand, helping students see what they spend their money each month before they can correct the problem areas, such as nonessential items.
"Credit cards can be a really effective tool if used responsibly, but they can also make it easy to build up a lot of debt quickly," Young says. "They are good for planned items or emergencies, but not things like groceries. If people can pay off their credit cards every month, then they are probably using them responsibly."
A debit card can be used in the same ways as a credit card but is limited to the amount of money in the owner's checking account.
Debit cards work well for parents who want to give their child a credit card for emergencies but are worried that he will use it irresponsibly. With a debit card, the child can't add up a lot of debt, and the money charged won't acquire interest and need to be paid back later.
More information on managing money successfully is available at K-State Research and Extension office. Click on "Home, Family and Youth" and search for "Basic Money Management."
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