This guest post is from The Digerati Life, a general personal finance site run by a mom of 2 and a former engineer from Silicon Valley.
So you’ve finally hit college. While it’s not exactly the real world yet, it can definitely feel that way if you’re working part-time to put yourself through school and paying for housing and any bills. It is your stepping stone to a fully independent life in your twenties. Play your cards right in college, form the right habits, establish the right foundations, and you should be fairly well equipped for what life has in store. There are no guarantees, certainly, but you’re putting yourself in a good position.
Difficult life lessons can be learned in your twenties, especially if you’ve learned, only too late, the need to budget, the need to be responsible, and the need to be more prudent with your spending. Had you learned these in college, you may well be able to avoid wrestling with these problems once you’re out in the real world. However, life is not perfect. If you’ve already started your career and your finances are in shambles, do take heart. You’ve got a lot of time. Either way, you may want this cheat sheet to skip the pain and devastation of making the wrong choices in the future.
Watch Your Debt. College is a financially draining time for most people. A college education is quite expensive, and student loans can plunge you into debt. How about minimizing the blow of college spending by being careful about the use of college student credit cards? Sure, some of these credit cards give you perks for having great grades and practicing good money management. But make sure you are ready to handle plastic before you actually do.
Learn To Budget. Are you the type who always spends his or her daily allowance to the last dime? If so, you may want to learn how to use home budget software to take care of your finances. A personal financial tool can be a roadmap that helps you to stick with your budget. Once you get used to budgeting, you can build upon your money management skills.
Set Simple Financial Goals. Yes, you’re in college to learn. But apart from getting through your classes, this is also a great opportunity for you to pick up some life lessons. No, we’re not talking about how to avoid getting your heart broken. We’re talking about how you can avoid breaking your bank account. For example, how about starting a new personal finance project? You could challenge yourself and set goals that allow you to curb your spending. If you own a credit card, see if you can pay them off in full each month. Setting goals can help you develop good habits that set you on a firmer financial footing.
Find Out How To Earn More. Once we’ve built up some savings, we should think about how we can grow our savings further. Think about reinvesting your long term money into equities and faster growing investments. Open an account with a top broker (some offer free stock trades) and review their mutual funds, ETFs and other products. This is one way you can earn extra through passive income. If your newfound savings habits have allowed you to save a good amount of cash, don’t go out to get the newest iPhone just yet. How about applying this money to any of these investment vehicles? Start young and the power of compounding should work to your benefit. This helps to make sure that your finances will be in excellent shape by the time you’re 30.
So get a head start in life. Form the right habits during your college years and you’ll set the tone for financial freedom for the rest of your years.
(photo credit: m31)