While it is tempting to think that one can be too young to be concerned about finances, this is simply not the case. The younger a person starts better financial habits, the happier and healthier their finances will be in the long run.
Additionally, there are plenty of financial concerns that college students face – there’s a reason why the idea of a broke college student is so pervasive. By setting a budget, and learning about proper finances right from the start, a student can set themselves on a path for success.
Set a Budget
Setting a budget can be tough, especially when there’s not a lot of income to deal with. However, that makes it all the more important. A budget can take into account all of the essentials, and even tell a student how much room is leftover (if any). This is the best way to stretch that shoestring budget.
When setting a budget, be sure to take into consideration any means of income (jobs, parents, loans, etc.), all expenses, and then the remainder. The remainder can be looked at in two ways: investment opportunities or fun money.
There are plenty of resources out there to help create (and maintain) a budget. There are even budgeting apps that can help out.
Investing at a young age is one of the best ways to accumulate strong funds. You don’t even need to invest all that much in order for it to make an impact. Once compound interest comes into play, time is really the biggest factor.
MoneyGeek has a lot of sound reasons to invest early. For example, if one were to put away $100 a month, by the time they’re 40 they would have $47,548 (after taking into account compound interest). Meanwhile, someone who started at 30 would have $15,599. Quite a difference in those numbers.
Just like it’s never too early to invest, it’s never too early to start building credit. Having a solid credit history is how one gets a good loan (say, for buying a house someday). Credit scores impact everything from the number of cards one can obtain, to the types of loans offered.
There are a few tricks on how to build credit. Don’t exceed what you can pay off is the first thing to keep in mind, naturally. Incurring debt is not the ideal solution. Likewise, try to diversity your credit. A credit card and a car loan look better (when paid in a timely manner) than two credit cards.
Leave Room For Emergencies
Earlier we talked about the importance of setting a budget and keeping to it. We also discussed two options for any leftover money (fun or investment), but there’s actually a third option that must be considered: emergencies.
Setting aside money for emergencies is a financially smart decision. Setting aside money for emergencies helps avoid the risk of going into unexpected debt. Emergencies aren’t fun to think about, but they do happen. Everything from car emergencies to medical emergencies, and everything in between. Even an amount such as $1000 can help to offset the situation.
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