Freshman Five

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Good-bye high school … hello college!

Leaping girl with head and hands thrown back

For many students, college is the first opportunity to live on your own, make your own decisions and manage your own money. Away from the watchful eye of mom and dad, there’s no one to see if you’re eating pizza at midnight or wearing dirty socks. Talk about fun, freedom and self-discovery! However, if you’re not careful, the habits you develop in college can follow you the rest of your life; especially when it comes to your finances.

If you think learning to manage your money can wait until graduation, you’re wrong! The earlier you develop healthy money habits, the better. Don’t wait, start now!

Want to know how to avoid the freshman five? No, we’re not talking about weight. Here are tips for avoiding five common mistakes college students make with their money.

1. Spending in excess.

In today’s society, because we all like immediate gratification, it’s easy to overspend without realizing it. Knowing where your money is spent can be a real eye opener. Try tracking your spending for a month. Carry a note pad and jot down everything you purchase, even something as small as a pack of gum or soda from the vending machine. At the end of the month, group similar purchases into categories (groceries, entertainment, clothing, etc.) and total what you spent. You may be surprised by the results! If you need to make some changes, you’re not alone. Check out the useful tips in the Common Money Leaks chapter to help you save money on things you actually need.

2. Living without a budget.

I know what you’re thinking … “I don’t have much money, so why do I need a budget?” Money is tight for most students. If having enough money each month is a constant struggle, create a spending plan to help you reach your financial goals. Use the information you gather while tracking your spending to help build expense categories for your budget.

3. Not keeping up with your checking account.

A checking account is a safe, secure and easily accessible tool for managing your money. However, if you don’t closely monitor your spending, it’s easy to get in trouble with fees and other charges. Here are two key rules for managing your account:

  1. Know your account balance. This is the easiest way to avoid paying overdraft fees. Always know your balance by recording every purchase you make and balancing your check register. Don’t rely on an ATM to give you the most accurate account balance because some purchases may not have cleared your account yet.
  2. Avoid foreign ATMs. If you use an ATM that’s owned by your financial institution, there may be no cost. However, if you use an ATM that isn’t owned by your bank, you may be charged a service fee, and your bank may charge an additional fee for using a machine outside the network.

4. Falling prey to the credit card blitz.

Don’t choose a credit card in response to clever marketing! Don’t be lured in by the offer of drink koozies, T-shirts or other freebies. Do your research and choose the card that’s most beneficial to you.

Look for a card that:

  • Doesn’t charge an annual fee.
  • Has a low, fixed interest rate.
  • Provides a clear explanation of fees for late payments and services, like cash advances and balance transfers.

Use this credit worksheet (PDF) to help you decide which credit card is right for you. For more information about managing your credit, check out the Credit Comprehension chapter in this module.

5. Not doing your homework.

… and I don’t mean the classroom kind. When making purchases, it’s smart to do a little research to make sure you’re getting your money’s worth. Take textbooks, for example. They’re a fact of college life and cost a small fortune, so it’s important to know your options. For the most savings, borrow books from friends who recently took the classes. Not possible? Buy used books from a classmate, campus bookstore or online bookstore (such as,, or Paying full-price for a brand new book should be your last resort. Taking the time to comparison shop will help you get the most bang for your buck.

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