College. The time to find new friends, gain life experience, and ultimately, figure out what path you want to go down.
While college is a mixture of fun and hard work, it’s also a time to be thinking about the future. And like it or not, a big part of your future is going to have to do with money.
When you get your personal finances in order and set yourself up for financial success, your money worries will be slim to none. Go in the opposite direction, and you’ll be setting yourself up for a life filled with struggle, stress, and regret.
Let’s avoid option number two and look at six things every college student should know about finances.
1. Student Debt Should Be Minimized at All Costs
I’ve heard countless horror stories from friends who have so much student debt that they think they’ll never get out from underneath it. But for every bad student debt story I hear, I also hear about someone who worked their way through school, avoiding all debt.
While it might be necessary for you to take out some student loans, you should only use debt to pay for tuition, room, and board. You can minimize the debt you take on by keeping your grades up, applying for scholarships, and working your way through school.
And if you’ve already gotten yourself deep into student debt, don’t look for #paymycollegetuition to work. You chose your degree and got into debt yourself. That’s nobody’s problem but your own.
Take responsibility, cut your budget, and make a plan to get rid of your student loans. Many people before you have done it and many will continue to do it. That’s proof enough that you, too, are also capable.
2. “Budget” Is Not a Bad Word
Your budget is your best friend as far as personal finances go.
The great thing about budgets is that you get to make them yourself. You determine how you want to spend your money according to your own set of morals and priorities.
A budget that is laid out well will allow you to live the life you want while also working toward your financial goals.
3. Making Sacrifices Is a Lifelong Necessity
As a college student, you know what sacrifices are like. After all, you’re sharing living headquarters with strangers, eating all the free meals you can, and scraping together your change for beer money.
College can teach you some pretty important financial lessons.
You see, life outside of college is all about sacrifices too. You’re not going to get your degree, land your dream job, and be able to afford a lavish lifestyle.
Instead you’ll get your salary and then have to choose between paying the rent and buying new clothes. And for your sake, I hope paying the rent is always at the top of your list.
4. Avoid Consumer Debt
Consumer debt is the archenemy of your personal finances. It drains you of your financial resources and adds unnecessary stress to your life.
While you might want to take debt out on a mortgage or even investment properties, you should not take out consumer debt. And just in case you’re wondering, some examples of consumer debt would be credit card debt, furniture loans, car loans, and any other type of “non-essential” debt.
When you’re tempted to use your credit cards to buy stuff that you don’t really need, revert back to rule number three.
5. Investing Is Easy
Contrary to what you might have heard, investing is actually super simple. In fact, you can set up an account at a place like Betterment, fill out a short risk assessment, and deposit your first 10 dollars, all in just a couple of minutes.
There’s no need to take your chance in picking stocks when you’re just getting started. You can simply invest in an index fund.
6. Start Investing Now
The earlier you get started investing the less you’ll have to invest thanks to compounding interest.
When you start investing now you’re giving your money plenty of years to gain interest. And then on top of that your interest starts gaining interest.
Take my tip above and start out with a simple investing strategy. You can always change your investments as you go. The important thing is that you start putting money away now.
You Create Your Own Luck
You create your own luck in your career, money, and life. What you might think are overnight successes from other people are actually years of hard work, determinations, and sacrifice.
You can create any life that you want if you’re willing to work toward your dreams.
Is there anything else you’d add to this list?