3 of the biggest money mistakes on campus

Independence is one of the joys of heading off to college. But financial independence can be an ongoing challenge as many students struggle with the responsibility of managing their own money.

Even though they’re often equipped to the hilt with smartphones and iPads, few of today’s students closely track their spending. They get their student loan money and a few months later are wondering where it all went. Here’s a look at common money mistakes college students face and how to address them.

1. Treating a budget as homework

It’s a mistake to think of a budget in terms of deprivation or what can’t be spent. Learning to live within certain limits can help students gain the discipline to save for their goals. Budgeting helps eliminate the anxiety of wondering whether there will be enough money when bills are due, and makes it more likely that goals will be achieved. Like many of the skills learned while in college, living on a budget will pay dividends for years.

Free online budgeting tools are offered on various sites, such as www.moneystrands.com and www.mint.com . Both offer smartphone apps.

2. Rapidly accumulating debt

It’s common for students, who often don’t begin repaying student loans until months after graduation, to put it way in the back of their minds, said Casey Weade, a financial planner with Fort Wayne, Ind.-based Howard Bailey Financial Inc.

“They don’t feel like that’s a real number to them,” he said. “It’s something that could really have a lifelong impact on their financial well-being if they don’t get that taken care of and don’t’ start paying on it before they get out of college.”

But an equally important concern for college students continues to be their use of credit cards. Recent regulatory changes now require card applicants under 21 to prove they can pay the bill, or have a co-signer to open an account, but most parents want their kids to have some card available, at least for emergencies.

About 40 percent of students report having a credit card in the “How America Pays For College” report by Sallie Mae released in August. The average balance was reported at just over $800.

The California-based Institute for College Access & Success estimates the average student loan debt for graduating seniors was around $20,000 at public universities, nearly $28,000 at private non-profit schools and around $33,000 at private for-profit colleges.

Adding credit card debt on top of student loan debt can weigh down students long before they even enter the work force.

Consider that 3.6 million student borrowers entered the repayment phase of their loans in fiscal 2009; more than 320,000 had already defaulted last fall, an increase of 80,000 over the previous year.

3. Choosing a bank without much research

If a campus is dominated by one bank, students shouldn’t assume that it offers the best terms. Many also will be bombarded by banks wanting their business and for them to open a credit account. Students should scrutinize ATM fees and online banking options that can make managing money easier.

It’s also wise to look into credit unions, many which offer lower fees and products geared toward students.

If you use a debit card be aware of the recent trends in which some larger banks are now charging fees.

Banks have been increasingly relying on extra fees as a way to increase profits as the federal government has cracked down on the banking and credit card industry, passing laws that limit interest rate hikes and other actions card issuers could take.

A study by Bankrate.com released in September found that although the majority of banks still offer free checking accounts, more of them require customers to meet certain conditions to have monthly fees waived. Minimum balance fees, ATM surcharges, foreign transaction fees and more have also proliferated.

It pays to shop around.