Financial Dangers as A College Student
As college students, being aware of the dangers of finance is critical to starting life on your own.
By Luke Stellick — February 28, 2023
Gambling is one of the fastest ways to lose money. You bet on black, and it lands on red. You ask the dealer for one more card and go over twenty-one. You think you have the winning hand but lose to a suited duce-seven. There are tons of other ways to lose your money. One of the most common ways many people must be aware of is simple financial risk. Unawareness is especially true for college students who are just starting to learn how to be independent. Most of this happens because college students are rarely prepared to handle their finances, let alone make informed and accurate decisions. As college students, being aware of the dangers of finance is critical to starting life on your own.
Careful With Your Credit:
One of the most dangerous aspects of finance for someone in college is using a credit card. While a great financial tool, many people need help understanding how to correctly use, manage, and upkeep a credit card. It's a commonplace for college students to have a credit card or be in the market to get one. If you arrive at college and don't have one, you'll most likely find that many banks and companies are trying to get you to sign up for one. When this happens, the best rule of thumb is to ignore them all and wait. After settling into college life, research a good, reputable company offering a credit card for a college student.If you have a credit card or just got one, there are a few things to keep in mind. The dangers of a credit card are in how it's used and paid for. Credit companies often give students of all backgrounds a relatively low credit ceiling, around $3000 or less. To a college student, this is a lot of money. The dangers come when you go to use the card. If you don't understand how credit works, it may seem that you aren't spending real money when you buy things. You'll pay the minimum monthly amount and go about life thinking all is well. However, that is a dangerous mindset. You'll slowly rack up a credit debt which will become overwhelming. Debt accumulation is the most dangerous aspect for new credit card users. The best way to manage this is to be aware of what you spend, how much you spend, and how much you have left to pay off. Ignoring your spending habits, missing payments, or even forgetting to use the card will lead to issues for you and your credit score. Asking for financial help from parents and mentors is a great way to learn and use a credit card safely.
Financial Overextension:
Next to the dangers of a credit card is the ability to overextend your financial capability. We all know that life is always busy and stressful as a student. Many people help alleviate this stress by purchasing things to give them comfort. It can be ordering deli very from a local restaurant, shopping for clothes, going on a trip with friends, or betting on your favorite team. While none of these are harmful and can help with stress, the danger comes when it becomes a habit. It may seem harmless at first, but dealing with stress and other issues by spending money is a habit that will quickly spiral out of control. So why call this dangerous financial habit overextending? It all comes down to personal finances. Overextending your finances creates a precarious situation where if something goes wrong, you cannot cover it properly. It all comes down to regulating how you spend your money and knowing what capacity you have to spend money.Some of the most common ways to overextend your financial abilities are with reckless management. Reckless spending is something that many people do, even if they understand how to handle their finances properly. It's essential always to understand what your finances look like. Let's say you have had a stressful week. During the week, you needed a way to handle your stress, so you ordered food from your favorite local places three separate times. Even if you made sure not to go all out, you probably spent nearly $75 or more. That's just in one week alone. At first, this spending may not seem like a big deal, but the numbers quickly increase if this happens every stressful week. On top of regular living expenses, unchecked spending can add up and deplete your funds much quicker than you think.
Let's add that it's winter, and your car battery has died. Depending on the brand and quality, a new car battery can cost over $100s, if not close to $200. This depletes your resources as well. If you're not managing your finances, you could have very little money in your account and still have to go on with everyday life. This is just one example of hundreds that can happen if you overextend what your finances are capable of. Instead of spending money to help with stress or spending it to treat yourself, you should instead create a detailed budget. Budgeting will ensure that you can properly manage your money and occasionally have some fun to destress. Still, there are other ways to help manage your finances.
As you enter college, there are so many new experiences that you can try. College can become very busy between sports teams, club activities, or hanging out with friends. With all the stress of student life added to that, managing your finances and ensuring you don't misuse them is vital to success at college. However, these two examples of credit card misuse and overextending your finances are just two in a sea of financial dangers. Some others include financial loans, identity theft, gambling, etc. Reading up on these will allow you to establish an excellent financial base throughout college and into your early life.
Luke Stellick
Born in Palos Heights, Illinois, Luke Stellick currently lives in Wauwatosa, Wisconsin. A graduate of Wisconsin Lutheran College, he earned his bachelor's degree in history and continues to learn and read about history as a hobby.
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