The Informed Investor
7 Steps College Students Can Take to Financially Prepare for the Future
April 15, 2022
To avoid financial shock and strain post-graduation, college students should begin taking specific steps to ensure financial stability while seeking higher education. Whether you work part-time, full-time, or don’t work while earning a college degree, there are still ways to financially prepare for the future. Here are 7 steps college students can take, to ensure financial security after leaving college.
1. Begin Budgeting
Students should begin budgeting in earnest in college, if not before. You do not need to invest in expensive software. For most students, a simple spreadsheet is all that is needed to begin tracking money coming in, and money going out. Include money from scholarships, family support, any part-time work, loans, and any other income streams. Then list every expense, including housing, transportation, books and materials, utility bills, meals, toiletries, and savings. Any remaining money can be allotted for personal use or entertainment. Begin disciplining yourself to stick to your budget. If you exceed your budget for one month, look for ways to make up for it the next month. Learning to budget as a young adult will prove invaluable for the future.
2. Look for Ways to Cut Expenses
Once you have your budget, you’ll be able to identify areas where you may be able to reduce expenses. For example, if your car requires expensive parking permits, consider leaving it at home, and using Uber or Lyft when necessary. Remember that many college campuses are entirely walkable, which can often eliminate the need for a car. Likewise, consider buying used books or ebooks instead of brand new books for your classes.
3. Put Some Money Away Each Month
The majority of college students don’t have a surplus of money. However, putting money away as early as possible sets the stage for responsible retirement planning early in life. A savings account is fine, but the interest can’t compare with the return you’ll get on investments in mutual funds with an IRA. Many funds allow for monthly contributions as low as $50-$100. That money can later be rolled over into other retirement accounts.
4. Establish Credit
If you’ve taken out student loans, you’ve begun the process of establishing your credit. However, you won’t be making payments on those loans until after school, so consider getting a credit card in your name. Shop for those with low-interest rates, and consider paying a couple of bills per month with your credit card. Then pay it off every month. This will help you to establish good credit history, which will make it easier in the future to be approved for an apartment rental, vehicle, and much more.
5. Consider a Part-Time Job
Even if you technically don’t need to work, because your income streams satisfy your expenses, you should consider taking a part-time job. Part-time jobs can allow you to begin putting more money away earlier. Incidentally, it will also help you to begin building your resume for the future. Be sure you’re working in the summer between semesters as well.
6. Take Advantage of Student Discounts
When it comes to your life outside of classes and homework, look for options that offer student discounts. Apps, movie theaters, museums, concert venues, digital subscriptions (Amazon Prime Student, streaming services), newspaper subscriptions, phone service providers, software programs, and more offer student discounts. In some cases, it may be as simple as signing up with your .edu email address instead of a Gmail or other free email address.
7. Ask Your University or Professors for Help
All students, regardless of declared major, have access to brilliant accounting and financial minds within their university faculty. Consider setting an appointment with a professor, associate professor, or even graduate student in your school’s finance, investment, or accounting department for suggestions on how to make what little money you do have, benefit you in the future.
Financial and Retirement Planning After College
Once you’ve accepted a job, and begin earning more money, it’s wise to meet with a financial planner to begin to plan for your future and your retirement. The earlier you begin investing your money, the more opportunities you have for your money to begin working for your future.
If you have a minimum of $1million in investable assets and would like to learn more about our retirement planning services, contact us today at 702-871-8510.