Joining university or college is an exciting experience. Students work hard in high school to get slots in the best institutions of higher learning in Kenya. However, when students join these institutions, many of them make financial mistakes that haunt them for the rest of their lives. Some fall into debt traps and end up paying loans for the rest of their lives.
Financial literacy should be taught in colleges to help students become financially stable. The following are some of the financial mistakes Kenyan college students make and how to avoid them.
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1. Misusing Student Loans
One common financial mistake among Kenyan college students is the misuse of student loans. The Higher Education Loan Board (HELB) advances loans to Kenyan students to cater for their education fees and accommodation. However, most students end up using the loan to buy expensive gadgets like phones, woofers and partying.
Once you graduate, you will be expected to repay the loan. It is best that you use the loan wisely and for the purpose it is meant for like paying your college fees, accommodation and maintenance fees.
2. Spending on Unnecessary Wants
The other common financial mistake among Kenyan campus students is the failure to differentiate between wants and needs. You need to have a financial plan to avoid pilferage. Spending on wants will leave you without money to cater to your needs. For instance, if you use your money to party, at some point you won't have money to cater for food.
Also, spending on needs will leave you with some funds aside that you can save. When you graduate, you can use the savings to start a business before you can get a job. You can also use the savings to start a business while still in college and grow your money.
3. Failure to Budget
Budgeting is a key factor in attaining financial independence. When the semester is beginning, it is best that you determine how much money you have and allocate every coin to a certain purpose. Once you have a plan, stick to it.
Allocate the money to accommodation, food, buying academic materials, and other important academic activities. With a good budget, you won’t have the problems of running out of money in the middle of the semester.
4. Failure to Save
Failure to save is a common financial mistake by college students in Kenya. Saving is an important habit that should be nurtured from a tender age. College students get tempted to spend all they have and are left with nothing to save. Probably it is because they know that their parents will cushion them when they run out of money.
Nevertheless, it is important that you save money for a bad day when parents may not be in a position to send you money and you need it urgently. Saving while in college will help you develop excellent financial habits.
5. Misusing Loans from Money Lending Apps
The youths and especially those in universities and colleges are the highest borrowers from money lending apps. These money lending apps issue loans without collateral and hence many students qualify for these loans. However, students tend to use these loans on unnecessary spending and are not in a position to repay them.
At the end of it all, these students end up being blacklisted by CRB for failing to repay. This makes them unable to access loans in the future. At the time, the loan has accrued a lot of interest and it becomes challenging to repay.
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6. Not Saving on Basics
Failure to save on basics is another common financial mistake by many Kenyan students. For instance, many of them fail to take advantage of on-campus accommodation that is cheaper compared to renting a house.
Students rent houses outside school and end up spending a lot on rental costs. As if that is not enough, they buy expensive items like woofers, televisions and furniture which they end up selling at lower prices when they are through with schooling.
It would have been cheaper to get on-campus accommodation and take advantage of subsidies like cheap food from the school cafeteria.
7. Failure to Apply for Scholarships
Many higher institutions of learning in Kenya offer scholarships to needy students. Unfortunately, not many students apply for these scholarships. Landing a scholarship would relieve your parents of the burden of paying school fees. Next time you hear your school is offering scholarships, make sure to apply and it would save you lots of costs.
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8. Lack of Financial Literacy
Lack of financial literacy is a common money mistake among college students in Kenya. Many students are not concerned about managing their finances. The sooner you know how to manage your money, the sooner you become financially stable.
It also helps you make sound financial decisions and also prevent you from falling into debt traps. With financial literacy, students will learn the importance of saving and growing their money.
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Many Kenyan college students make these financial mistakes due to the lack of financial literacy. Unfortunately, students are not taught financial literacy in colleges. It would help them find money solutions. If students can avoid the above financial mistakes, it would help them prepare for life after school through saving and investing.