As college students, we are constantly worried about our studies from homework to finals exams and our social life, hanging out with friends and going to parties. Some of us even have part-time jobs and have a small stream of income to keep ourselves afloat in college. However, amidst this whirlwind, it may be hard to find time to check your spending habits or even think how you are going to set yourself up for financial success once you are out of college.
Here are some pointers to help get you started on the road to financial success:
1. Reduce Debt
A big portion of your financial success will depend on getting your total debt as low as possible, whether it be student loans or credit card debt. Not paying on time will cause you to incur interest charges which will eventually eat up your income if not carefully managed. In particular, credit card interest rates are set exorbitantly high for the companies to make a profit, so missing even one payment can start affecting your financial situation as well as your credit score, which puts you at jeopardy for future loans. A smart first step to planning your financial future would be to minimize the amount of debt you owe and to make sure you pay on time.
2. Save, then Spend
In a 2017 survey of Americans regarding saving habits by GoBankingRates, a staggering 46 percent of millennials reported having no savings set aside. A habit that seems to be prevalent with older folks, putting money aside in a savings account just makes financial sense. Not only can the money be used in a desperate circumstances like a rainy day fund, but it can also be used as a springboard for investing and growing wealth over your college career. If you put $1000 a month in a savings account that receives 2% APY interest for 10 years, you would have over $132,000 in that account, in which $12,000 alone came from interest. Saving now will allow you to reap the rewards later in life.
3. Investing
I always thought investing was for the big players on Wall St., hectically trading all these hundred dollar stocks on the floor of the New York Stock Exchange. What investing really entails is a commitment to keep your money in a venture, whether it be the stock market or the money market, and watching it grow over time. Different ventures have different rates of return with various risk levels, so investing in the money market is a relatively safe investment with a small rate of return while the stock market can get much higher returns but with a lot of volatility. Getting starting doesn't require a lot of money, and with the Robinhood app, you can start buying stocks and trading as soon as you sign up. When you join using this link, they'll even give you a free stock to get you started (it could even be an Apple stock!).
4. Write Down Your Financial Goals
Most of success comes with careful planning and constant evaluation, so writing down your financial goals for both the short-term and long-term can put you on track to grow your wealth over time. Goals should be specific, time-oriented, measurable, and most importantly, should be attainable. For example, you could set aside $100 a month to put in a savings account for 2 years or put $500 in various stocks to make $50 at the end of the year. These examples are especially beneficial because you can reevaluate them at different times and adjust them to better suit your specific set of circumstances.
Starting with these tips now will lay the foundation for success in your financial future.
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