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Guaranteed Riches For College Students (No Joke)

29 September 2008 9 Comments

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.


  • Dan said:

    I am 21, senior accounting major in college and like you said struggling just to pay for college. I have a great time coming to this site (i found it a couple months ago) a couple days a week and seeing your updates, not much is new info to me, but it is nice to have someone reinforcing and basically telling me what I am doing is good.

    That said, I made a budget about a year ago when I got my first, and only credit card. I knew with the way I spend money i need to put limits on this new piece of plastic opportunity. Also, i work part-time and the budget lets me see where my income goes. In my budget i included:

    -savings, which i deposit to e*trade savings account earning about 3.3%, only 20 dollars a week, but hey you have to start somehwere

    -spending, i set myself a limit to how much i can spend a week, purely on myself, whether it be going out to bards, going out to eat, movies…etc. I put the cash once a week in an envelope, if i dont spend it all, it carries over to the next week.

    -groceries, bills: the necessities

    -my only attempt at investing thus far is a site called prosper.com, i dont know if you have heard of it, but its interesting and I am just trying it out currently with small amounts of money, you can go to the site to learn what its about

    -lastly i have a long term fund in my room, i just put a few dollars in a day when i have it lying around and forget about it, its just for a long person “me” purchase that i may want, tv, car, house. Who knows, but I do know that I am painlessly saving for it right now.

    I know this is a little all over the place, but just a little overview of what I’ve done to start my path to hopeful financial freedom.

  • kevin duffey said:


    You are doing some awesome stuff to pursue your financial goals. I’m extremely impressed with how early you have started. $20 a week in college is so far ahead of the curve; it’s awesome!

    Keep up the great work!

    p.s. Let me know some topics you would like me to write about, if as you say, nothing here is really new 🙂

  • Sean said:

    Great post…I’m a 20-year-old college junior. Two months ago I read about how big of a difference starting early can make and I set up a Roth IRA immediately. I’m currently contributing $100 per month to my IRA which currently holds everything in Vanguard Total Stock Market Index (VTSMX). I plan to diversify into different funds and maybe even some stocks once I accumulate $10,000.

    When I’m working, I use direct deposit and split my paychecks between savings and checking accounts, putting away a fixed amount into the savings no matter what. Whatever goes into the savings doesn’t get touched except for investments and large purchases.

    I live on campus and have managed to avoid having a car since I graduated high school. I walk to class and bum rides off my friends. Works great and saves TONS of $$$

  • kevin duffey said:


    Man, how I wish I did what you are doing in college. It makes me sick to think how further along I could be if I did what you are doing at age 20.

    I’m pumped to meet people that are doing the right things financial when most of our country is doing the opposite. People like you, who have started as early as college, make me even more pumped.

  • James said:

    Hey I just turned 20 a few months ago, a college sophmore (staying at home) and really glad I found a website that targets people my age, because my peers are so illiterate when it comes to finances, because no one is teaching this stuff. But anyway, I have two savings accounts, one of which I dont touch, a checking account, and a Roth IRA between two different banks. I try to save anywhere from $60-120 a month, splitting that between the IRA and the savings account. My next step is to find a good discount brokerage and take advantage of the recent stock prices. I also keep up with all my expenses anywhere I go (thanx to my blackberry lol) so I always know how much money I have at any given time.

  • kevin duffey said:


    I’m glad that you are enjoying the content here at 20smoney. I searched for a long time for content targeting people in my age group and decided to just create it myself.

    You are way ahead of the game when it comes to financial responsibility, so congratulations. Second, I want to encourage you to keep it up.

    I would definitely recommend Zecco since you get 10 free trades a month (plenty). If you don’t mind, click that link and I’ll get credit for referring ya. I switched to Zecco a few months ago b/c i was sick of paying $12.95 a trade.

    Good luck!

  • James said:

    The funny thing is that most people have been wiped out the last 3 months… so an 8% discount rate is GENEROUS.

  • kevin duffey said:

    Sure, but you have to recognize three months is a very short time span. You can only really estimate returns in the 8% range when you are looking long term, 10+ years out.

  • Doctor S said:

    I am 25 and out of college and I wish I had the knowledge I do now, especially like something you offer here. The problem with college kids these days (and how I was before) is that they don't want to listen to anyone these days and will do what they want. Hopefully, they learn a thing ror two of what you mention above!