Most high schools and colleges don’t require that their students take finance classes. As a result, many college students and young adults become somewhat clueless when it comes to managing money. That’s why this article will reveal the four most important things that college students need to know if they want to live a comfortable and abundant life after college.
Practice Self-Control With Your Money
If you find that you can delay gratification, you will find it easier to keep your finances in tip-top shape. Although you can buy anything on credit the instant you want it, it’s better that you wait until you have the cash to pay for it. Who wants to pay interest on a pair of sneakers or a box of crackers?
If you put the majority of your purchases on credit cards, whether or not you pay your bill in full at the end of the monthly cycle, you’ll pay for many of these items a decade from now. If you want to keep a credit card or two for the rewards that they give you, always pay your balance in full at the end of each credit card cycle. You also shouldn’t have more cards than you can easily keep track of without help.
Keep Track Of Your Money
First and foremost, you should always make sure that your expenses don’t exceed your weekly or bi-weekly income. The best way to do this is through budgeting. Once you see how your daily cappuccino adds up over the course of a month, then it becomes that much easier to make changes in your everyday expenses. These small changes can have just as big an impact as getting a promotion at your job.
You will also want to keep your monthly recurring expenses as low as possible. Doing this will save you a lot of money over a period. If you’re not spending every bit of your money on an industrial loft in a major metropolitan area, you can afford a beautiful house or condo before long.
Start That Emergency Fund Today
No matter how much you have to pay on your student loans or credit cards, it is imperative that you pay yourself first. Decide to put a certain amount – any amount, no matter how small – into an emergency fund every week, every two weeks, or every month.
When you put money into savings to use for emergencies, it will not only keep you out of hot water financially. It will also help you feel less stress around your financial situation. If you treat your emergency fund money as a non-negotiable expense, you’ll have more than money for emergencies. You will also have money for retirement, vacations, and even a down payment for a home.
You should put your emergency fund money in an online high-interest savings account offered by hundreds of banks in the United States. Other options include a money market account and a certificate of deposit. If you put the money in one of your local banks, inflation could eat into the value of your hard-earned savings.
Save For Retirement
The way compound interest works, you will reap amazing benefits if you start saving for retirement in your 20s. You can start with retirement plans that your employer sponsors. These savings plans act as a good option because you can put in money before it gets taxed, plus you can contribute a significant amount of money before it gets capped. Many employers will also match your contribution.