By Kaleb Anderson
To be a young adult is to constantly make decisions, and the root of every decision is money. The decision to continue school or begin working is centered around if you can afford to go to school. Decisions about where to go to school comes down to what schools you can afford to attend.
Decisions about what major to choose are based on what jobs pay well. I am currently making a financial decision as I write this. With all on-campus dining closed and under $100 dollars in my account, do I order delivery or cook instant ramen? Money affects the way all of us of this think more than we know.
The question is — do you have the financial literacy to balance your spending? For many students, that is a learning curve. Since I was 16 years old, I’ve received many mailed offers from credit cards companies trying to get me to apply. But before I could even look at them, my father would throw them in the trash.
That ceremonial exile would be followed by a monologue of the dangers of having a credit card. I heard it so often, I can recite it, letter for letter. I used to
think he beat the topic like a dead horse, but he was right. On average, college students own two credit cards, averaging $3,568. Students fear credit card debt even more than their student loan debt, according to CollegeFinance. When asked why they attained a credit card, 56.7% of students said they just wanted to have one. No plan to build a good credit score or learn good credit habits, but rather just to have one. The concept of a credit card sounds enticing, buy now and pay later. The problem with this way of thinking is that it builds a mindset that “I can buy a bunch of things and then I’ll pay it off later.” You repeatedly keep this way of thinking only to find that all your purchases come back to haunt you, creating significant debt. Then, to save their credit score, people will open even more credit card accounts.
Credit card companies specifically target students because many are short on
cash and lack the financial knowledge to properly use one. But what if my father didn’t beat it into my head that I don’t need a credit card? I wouldn’t have learned the information from high school and might not have even had the wherewithal to do my own research on it before I applied for a credit card. This is the challenge most students face. Without being given the proper guidance, we can leave college owing substantially more money than when we first arrived.
Even with the proper guidance, there still might be enough discipline for students to stop buying. According to study of consumer panel data in 2019, 22% of Gen-Zers make impulsive purchases. This lack of knowledge and discipline combined with the ever-rising crisis of student loan debt cripples the futures of college students. Debt has a snowball effect. Post-graduation, students cannot become homeowners or could get turned down from renting apartments if high debt lowers their credit scores.
But there’s a solution. A practice that’s easy for everyone to follow that I’ve been using since I was in middle school: be frugal. The art of frugality is something that anyone can learn regardless of how financially literate you are. Try to eat more from your meal plan rather than going out. Rather than shopping out of impulse, reflect if you really need that item.
Look at the opportunity cost of your purchases. Am I getting the highest return I can
on this purchase, or can this money be put to better use? Practicing frugality helps to build discipline and prevent you from going in the gutter. Occasionally, you might slip up. You get tired of eating on-campus food, so you go to Raising Cane’s or Wingstop a few times throughout the week. Then you buy a couple of things to prepare for a fun weekend. That, combined with all the subscriptions you pay, hit your bank account at the same time, and leaves you under $100 on a Monday night.
With on-campus dining, closed you have but two choices: spend even more money or cook some instant ramen. But being frugal prepared you for this, and you
pick the ramen, always pick the ramen.
Anderson is sophomore at the University of Missouri, studying journalism.