Guaranteed Riches For College Students (No Joke)
As a just turned 26 year old, I have a pretty good start in comparison to most when it comes to saving money for my future, whether that future is retirement or just a lifestyle to be enjoyed later in life. I have been pretty diligent and proactive since joining the work force after graduating college to where I’ve already saved up some money and am well on my way to investing. As I’ve said many times, starting in your 20s (and then continuing through your life) can truly make building wealth and having a nice retirement fund almost certain. Let’s take this even further… starting in college, even as young as 18 years old, pretty much guarantees riches later in life.
A recent article I read did a typically comparison of starting one age vs starting later in life, and how much money is accumulated as a result. As usual, the numbers are pretty staggering. If you assume $3,000 annual contributions and an average 8% return, each year you wait to begin saving early in your life will cost you approximately $150,000 at about age 70.
Even if a recent graduate begins saving immediately after becoming employed with his or her new job (which is rare), think of the difference in starting even earlier? If we assume that most financially proactive people begin saving at about 25 years of age, we can then say that a person who starts at age 20 while still in college can potentially have a $750,000 impact later in life according to the above study. Someone starting at 18 will have an impact over a million dollars. Pretty nice huh?
So, the benefit of starting as early as college when it comes to putting away money is pretty undeniable. The question then is: how the heck can one save money in college? Most can’t even afford college! Let’s look at a few options to help steer a college student in the right direction.
Avoid non-academic debt: Don’t put that new Playstation on your credit card. You don’t need it. Walk across the hallway to another dorm, and play your buddy’s instead.
Sell your car: One of my good buddies in college never had a car. We pretty much forgot that he never had a car. It was never a problem for him. He lived near or on campus so getting to class was a cinch and he was always able to get where he needed to go when he wanted to go there, including traveling home. Cars are expensive when you consider gas, maintenance, etc. Again, sell your car.
Make a budget and track your spending: This will not only help you be financially smart during college but this habit that you start early will help you be financially smart for the rest of your life.
Start Investing: Start buying stocks and / or ETFs with the money you put away. Investing money while in college will help you get in the habit of investing which will pay off exponentially for years and years. Starting the process of learning how to invest at such a young age means you will gain experience and knowledge faster and earlier in your life. This will be more of an impact that you can ever realize now.
I would love to hear from some college students that are doing everything possible to prepare for their financial futures while they are still in college. Leave a comment or email me some of your stories or experiences. Man, how I wish I could go back to college and do what I’m talking about in this post! Good luck.