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  1. #1 8 Misconceptions College Students Have About Money 
    8 Misconceptions College Students Have About Money

    By Emily Driscoll

    Published January 18, 2011

    | FOXBusiness

    Between the plethora of iPhone apps that help budget your lifestyle, and free access to Web-based financial literacy programs, there is no excuse for college students to be reckless and ignorant with their personal-finance habits.

    College is the perfect opportunity for students to take hold of their finances and establish smart spending habits that will follow them into the real world of paychecks and mortgage payments.

    “Managing one’s finances is a necessary life skill and can be very empowering if done effectively,” says Bonnie Kirchner, author of Who Can You Trust With Your Money?, Get the Help You Need Now And Avoid Dishonest Investors. “The alternative is letting money manage you by living paycheck to paycheck or worse, building up uncontrollable debt.”

    But being smart about money is easier said than done. Here are eight common misconceptions that college kids have about money and how they spend it.

    I Don’t Need a Budget

    Keeping tabs on your expenditures compared to your income makes it easier to keep your spending in check. You won’t know where your money (or lack thereof) is unless you track it and stay within your budget.

    You don’t need an overly-complicated spreadsheet or purchase software to stay on top on your spending habits. With Web sites like, a budget can tied to your credit or debit card to track expenses and pinpoint wasteful spending.

    “Your own bank has software that will let you set up your own budget the way you do online banking,” says Kimberly Palmer, author of Generation Earn: The Young Professionals Guide to Spending, Investing, and Giving Back. “If you use a credit or a debit card, you can log in, press a few buttons, and you have a whole spending analysis at your fingertips.”

    All Credit is Bad

    While you certainly don’t want to go overboard with a credit card and rack up a bunch of debt, you should not be afraid of creating a responsible, well-maintained history with lenders. A solid credit history will be necessary later on in life when you are looking to take out larger loans for grad school, a car or a house.

    “Some people avoid all debt like it's the plague so they avoid credit cards altogether [or] any sort of loan,” says Palmer. “The problem with that is that people don't have any sort of credit history when they are trying to either one day take out an auto loan or take out a mortgage.”

    I Don’t Need to Worry About my Co-Signer’s Credit

    The new credit card laws require anyone under the age of 21 have a co-signer with an established credit record in order to get a credit card.

    The co-signer provides the security and assumes financial responsibility if you default on payments. If you make late payments or continue to make purchases you cannot afford, that negative activity will affect both people’s financial futures.

    “In the event something goes wrong, [a co signer] will have to pay the money back and/or tarnish their credit history which may in turn affect their ability to borrow in the future,” explains Kirchner.

    Removing your name from a co-sign agreement isn’t as simple as you might think, warns Palmer.

    “This actually even happens with married couples; even if you get divorced, it's really hard to separate your accounts. “Lenders don't really care what your relationship situation is-- they just see you as a joint [account] no matter what.”

    Student Loans are Easy to Pay Off

    Because it seems as if everyone has student loans, college graduates tend to think making payments after graduation will be a piece of cake.

    “So many kids assume that they will be making money hand over fist once they have their diploma in hand so whatever is borrowed during their college days is inconsequential,” says Kirchner. “Unfortunately it’s not that easy.”

    Students graduating right now face a tough labor market, making it hard to find a steady, well-paying job.

    Palmer explains that if you have big post-graduation plans, such as buying a house, you may have to wait a few years until you get those loan balances under control

    “It affects your entire lifestyle and what you can afford,” she says. “When you have hundreds of dollars that you're paying each month, it basically prohibits you from making those other purchases that are important to you.”
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    Jan 2011
    #9 Money grows on trees.
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