Gallery: 10 Things College Students Waste

Money On
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When we made the decision to pay for my son’s college education many years ago, we never
expected the price of tuition to almost double just as he entered the University of California. To
top it all off, the timing of his freshman year followed a decade of lackluster growth in his college
fund. We are not alone as parents everywhere are struggling to help their children walk across
the stage in the cap and gown to gain a coveted college diploma. Parents may have socked
away funds to pay for tuition and books, but with costs rising there is simply less money to
spend on all the other expenses associated with being a student.

Because of the poor economy, students now have more of a burden to help pay for their own
college expenses. No one wants to rack up huge student loan debt to pay for it all, but nearly
two-thirds of undergraduates take out student loans, and college seniors are graduating with an
average loan balance close to $24,000. It is daunting to finish college with high student loan
balances and large monthly payments, and it sure takes the excitement out of graduating when
you start making those payments, usually within the next six to nine months.

College students need to manage their money differently today than they have in the past. I
was reminded of that the other day when I saw an ad with a college graduation photo of a
student who obviously had a skier’s tan with huge pale eyes in the outline of goggles. The
caption said, “Congratulations on your eight year college experience.” I smiled but cringed at
the thought of my son doing that! The days of lingering at college and wasting money are over.
Students today need to embrace the “starving student” mentality not just to help their parents
pay for the COST of going to college—and thus reduce the amount of loans needed—but also
pay for the COST of going to college—and thus reduce the amount of loans needed—but also
to help themselves learn solid money lessons that will serve them well later in life.

Managing cash well is not only a good habit to learn but it also contributes to future financial
success. In our research, we have seen a high correlation between employees who know they
are on track for retirement and day-to-day money management skills. In the landmark book The
Millionaire Next Door, Thomas Stanley and William Danko found that one of the common
denominators among people who become wealthy is to live below their means. The millionaires
in their study saved a much higher percentage of their income than the 10% that financial
planners typically suggest as a rule of thumb. They also exhibited traits of being frugal
throughout their lives. Now might be a good time for students to start.

Struggling through college, taking on greater financial responsibility to reduce expenses, and
learning to live on less, could actually make the poor economy a lifelong benefit for today’s
students. Students who master managing their cash flow will not only receive their diploma for
intellectual excellence, but will graduate with practical life experience and a financial acumen
that will give them a great start in life.

There are many ways students can cut costs—some more drastic than others—but the bottom
line is students do waste a lot of money. Those wasted dollars could certainly be put to better
use.

Here are 10 Things College Students Waste Money on:

Textbooks – Buying new textbooks from the campus bookstore is expensive. Years ago the
alternative was “off campus” bookstores, but now students can buy and sell textbooks online
through retailers such as Barnes and Noble, or on websites such as Amazon.com and
SlugBooks. SlugBooks even allows you to search for your school, class, and professor, and it
compares prices from the bookstore, Amazon.com, and Half.com. They also have an option to
rent books at a fraction of the cost to buy. For example, in the UCLA bookstore you can
rent books at a fraction of the cost to buy. For example, in the UCLA bookstore you can
purchase a brand new copy of A First Course in Probability by Sheldon Ross for $137, or rent
the same book for $47. Students who average 4 classes per semester and only have two
books per class could save $5,760 over four years on textbooks.
Tuition – For the 2010-11 school year, the average cost of tuition and fees for a public college
was just over $7,600, and for a private college was over $27,000. Parents are feeling the pain
as tuition has risen on average about 5.6% a year since 2000, and with many state budgets in
fiscal crisis, future increases could be even higher. Unless you get a full scholarship, paying
tuition is unavoidable if you want to graduate from college. To minimize the cost of tuition, high
school students can take advanced placement (AP) classes or take classes at the local
community college and get some of the core classes out of the way. Students at 4-year
colleges may want to take lower division classes at summer school or over a winter break at a
local community college and transfer the units.

Students who enter college with 15 transferable units (at $300 per unit) from a community
college or AP classes just saved themselves $4,500.

Automobiles – Sell your car or don’t bring it to school. Owning a car means a lot more than
putting gas in the tank; there is the maintenance, insurance, and parking to consider. According
to a calculator on Edmunds.com, the true cost to own a Ford Focus for a 5 year period is not
just the $15,000 price to buy the car, but another $21,700 to operate it. (Click here for the
calculator.) Insurance is still high for the 18 – 25 age group, even with a good student discount.
Choose a college where you don’t need a vehicle, and if you want to come home to visit your
family and friends, put a sign up for ridesharing. Those students with cars are starving and they
need the gas money. Pitch in and make some new friends.
Students that bike, walk, or use local (usually subsidized) transportation can save about
$20,000 during their four years of college.
Housing – You have to live somewhere but how you go about it can make a huge difference to
your bottom line in college. Many college students want their own room after being crammed in
a room in the dorm with someone they have never met before. They long for some privacy and
peace and quiet but when it comes down to it, rent is one of the highest expenses in college.
Investors love to buy rentals in college towns and sign the students up for annual leases so they
have to pay all summer even if they are going home! Frugal college students who double up
and share rooms all through college can save a small fortune. They do have to trade off the
peace and quiet and privacy. No one said it would be easy.
You may be able to get a two bedroom apartment in Austin, TX, for $1,000. Share it with
someone else and that’s $500 each, but share it with three others and that cuts the housing
cost down to $250 per month saving $12,000 during the four years of college.

School supplies – These may seem minor, and of course you need school supplies, but if you
can get them for free then it is certainly a waste to buy them. At the beginning of each new
school year (and usually following a semester break) the bookstore and campus organizations
often have “welcome” or “welcome back” events where they give away free or greatly reduced
stuff. Students can stock up on free notebooks, pens and pencils, and sometimes (I have
heard) free pizza to top off the incredibly great deal.

Welcome back events take 20 minutes of your time every semester but save you about $40
(including the pizza) which could save you $320 over four years.
Food – Innovative and socially active students may be able to get a free lunch by joining on-
campus clubs and organizations. Clubs that meet during the lunch hour often have a full lunch
available for the attendees. (Depending on how active you are, you might get a free lunch
every single day of the week!) For the average student, going to an organization meeting once
a week could save as much as $40 a month in food. You can also volunteer for alumni
association events or become a student ambassador and attend evening events and mixers –
the spread of food at these events is incredible and usually plentiful. Attend an event once a
month to represent your school, network, and meet people in the community (who may become
your next boss) and also eat for free.
Being a student ambassador (or something to the effect) and joining an organization with lunch
meetings could save you about $2,500 over your college career.
Socializing – I know you were expecting me to say “beer” and I hate to disappoint so I’ll say
“beer.” It is more than that! Socializing is not a waste of money, but excessive expenses
associated with socializing can be. If you go Greek and join a fraternity or sorority, do you have
to go to every single formal? Seriously? College students have plenty of opportunities to take
advantage of on-campus subsidized activities such as athletic events which are often free with
a student ID card. That way they can enjoy the campus experience without shelling out the big
bucks.

Spend your Saturday at the college football or basketball game with free admission, or consider
using the campus recreation or activities center for subsidized outdoor adventures such as
skiing or rafting. This one is difficult to quantify so I won’t try, but you get the picture.
Applying for Credit – The average college student graduates with $4,100 in credit card debt.
Resist the temptation to apply for credit, and instead use a debit card or simply a cash system
instead of buying things you don’t need with money you don’t have.
Savings by not having a credit card and racking up debt at high interest rates: $4,100.
Skipping the Deals – College students have it made when it comes to discounts! From
discounts for cell phone service to discounts for computers, savvy students should take
advantage of them. Be careful not to buy simply to get a discount, but if you are going to make
a purchase anyway, use the student discount. An article that highlights 81 student discounts
can be found here.
When you add it up, it is really amazing how you can take a tight college student budget and
really squeeze out some extra dollars:

Textbooks ………………. $5,760

Cheap units…………….. $4,500
Not having a car……….. $20,000

Sharing a room…………. $12,000

School supplies ……….. $320

Food………………………. $2,500
Socializing……………….. hard to quantify
Credit cards…………….. $4,100
Missing deals…………… hard to quantify
Total money saved: $49,180
Most college students can save money by avoiding at least one of these money wasters.
Considering the impact that could be made with a concerted effort in being frugal, it seems like
the first class they should sign up for is one on managing personal finances. In fact, that class
should be required for all lower classmen. The good news is students don’t have to live ten
guys to a room or never leave the library to save money. With a little forethought and maybe a
little sacrifice, the “starving student” may just end up being the millionaire of tomorrow.
Nancy L. Anderson, CFP ® is the Think Tank Director and Resident Financial Planner at
Financial Finesse, the leading provider of unbiased financial education for employers
nationwide, delivered by on-staff Certified Financial Planner™ professionals. For additional
financial tips and insights, follow Financial Finesse on Twitter and become a fan on Facebook.