With the amount of student debt continually on the rise, it has become more pressing to help students understand how to manage cash-flow and create a healthy balance between debt and spending during their formative college years. According to the Project on Student Debt, the average student debt levels for graduating seniors increased 25%, from $23,450 in 2008 to $29,400 as of 2012, represented by 1.3 million students carrying debt upon graduation. These numbers speak directly to the increasing use of debt to fund college expenses, above and beyond tuition, room and board, and book costs, and the mindset that instant gratification, or the “have it now” mentality, is taking hold of the student population at a dangerously high rate.
In an effort to curb the potential for costly mistakes of high student spending, we can offer students helpful examples that can shift them away from the “have it now” mindset, saving them from drowning in debt upon graduation.
Don’t make impulse buys
Students all know that the newest smartphone or tablet can be exciting to purchase as soon as it comes on the market, but buying pricey items like these can be an expensive misstep. Share with students that instead of acting impulsively on new tech gadgets, they should take inventory of what they already own. Ask them if their current phone still works, even if it has a few dings or scratches. If the answer is yes, purchasing a brand new phone, simply because it is brand new, just isn’t necessary. Encourage students to wait a few months until the phone or tablet is offered at a discounted sales price, or advise them to add it to a holiday wish list for friends or family to purchase for them. Saving that few hundred dollars now could mean a lower debt burden in the future.
Don’t be the chauffeur
New students may not be aware that the costs associated with purchasing a car to keep on campus in combination with the expenses of upkeep (insurance, parking, gas, and permits) can be a detriment to smart spending in a big way. Encourage them to utilize mass transit or student transportation services as an alternative to keeping a car on campus, and share with them how they can use these options to get around. These choices are much more cost effective, as most are offered at little to no charge. Share with them that refraining from spending money on car upkeep, and quickly becoming the class chauffeur, can free up cash that can then be used to pay interest on student loans or to save toward repayment after graduation.
Know what’s happening on campus
We can all agree that the social aspect of attending college can be as important as the educational aspect for students; it can also pose a problem for their wallets. Students are easily tempted to buy tickets to the latest concert or movie out in town because they may not be aware of the ample budget-friendly options available on campus at a fraction of the cost of similar events elsewhere. From comedians and music artists to art exhibits and community service projects, students need to know they have a number of choices for free or inexpensive events that can quickly fill up a social calendar. Encourage them to avoid this costly misstep by directing them to the campus event calendar or social media sites for campus events or student groups. Students can save hundreds to thousands of dollars throughout the course of their college experience by being aware of on-campus events held specifically for them.
Imploring some of these smart spending tips can mean the difference between graduating with hefty loan balances with hard-to-manage repayment terms and being set up for financial freedom after leaving college. We can help students begin to shift away from the “have it now” mentality early on in their college career in order to ensure they are financially fit upon graduation, and they can use similar cost-saving tips well into the future.
About the Author:
Kyle Gonnell is a Marketing Manager at iGrad, an innovative and industry leading financial literacy company that provides personal financial education and student loan counseling to students, educators, faculty and alumni.
3 Time-Saving Tips to Help Educators Lead Students Away from the “Have it Now” Mentality