Is Saving For Retirement As A College Student Possible?
Sometimes the mounting debts of college students overtake their bank accounts and it can be difficult to imagine a lifestyle where debt isn’t an everyday reality. But if you can manage to get your finances in order, you’ll realize that it is very possible to get yourself out of debt as you progress through school and that it’s even more possible to start saving for retirement as you plow through the courses for your degree.
The first step to figuring out how you can start saving money for retirement is to evaluate your financial situation and debt accumulation. It’s important to ensure that your student loan debt and credit card debt are kept low. The more money you owe to other people, the less money you can save for yourself. Talk to financial advisors on your college campuses to see what they can do to help you get back on a financial track.
With yourself in financial order, it’s time to figure out how you can get some extra money out of your budget each month to put aside for your older age.
Obviously, one of the best ways to get extra money for yourself is to lower your overall monthly living costs. If at all possible, try and move back in with mom and dad, or move in with a friend where your rent will be lower. Most people sign leases at apartments for more money than they should be paying for just a place to sleep. Use your resources to your advantage and figure out how you can rent a place for cheaper. If done in a smart way, i.e. living farther away from campus and commuting, or staying with friends/parents to avoid paying premium rent prices, you can save at least $100 a month to put aside for retirement.
One thing that’s often overlooked as a huge money saver is cutting down on textbook cost. On average, students spend about $400-$500 each semester on new textbooks that their professors require. Scour the internet and use sites like bigwords.com to find deals on the textbooks you need for your classes. And if local bookstores have the option, rent your textbooks instead of buying them. Buying textbooks is like throwing money down the drain because you’ll never get back anything near what you paid for them. Rent your texts for about half the cost of buying them. By combining renting and buying online at discount stores, you can find an extra $200-$300 of textbook money each semester that can be saved for your retirement.
You may not have access to a 401K while in college, but if you’re free of credit card debts you can start investing in a Roth IRA. Taking a few dollars out of your monthly income and putting it towards a retirement fund like a Roth IRA can pay huge dividends down the line. Most people start investing their money in their early to mid 30’s, which is far too late to start thinking about retirement. Start investing early and if you invest regularly and intelligently, you’ll see your retirement funds pile up by the time most others start even thinking about saving.
Written by Nick, a frequent contributor to 20smoney.com