When you are in college, you are entering a new, exciting chapter in your life. Most things are happening for the first time, such as independent living and self-regulation. It’s hard to balance all of that with the possibility of what the next few decades or even your retirement will look like. That being said, it’s important to think about a strong financial future as early as possible.
Just like the way compound interest works, the sooner you invent a principal amount in a place that accrues interest, the more it builds on itself, the larger it makes the principal. This new amount, in turn, accrues interest. If left alone for a long enough amount of time, it can give you a nice nest egg. Roth IRAs are the most recommended investment for building a nest egg.
However, even working part-time or full-time jobs during college, most students will have a hard time thinking that far ahead. Putting it into a more relevant perspective, it would be a good idea to imagine yourself directly after graduation. Start setting money aside for worst-case scenarios of different potential situations. An emergency fund is a great idea because you might need to rely on it while jobhunting after graduation. The financial standard is to have enough saved to survive for roughly six months, but there are many ways to stretch your money further. Budgeting is essential both during and after college. Not only will it prepare you for the rest of your life, but it will give you a true sense of ‘needs’ vs ‘wants’. There are basic necessities that all people must have in order to live a humane existence. Shelter, clothing, and food are a few examples. Calculate all of your income after taxes, and then deduct the money needed for essentials. If there is any discretionary money left over, you have the option to spend it or save it.
Student loan debt is one of the biggest obstacles for college graduates trying to save for a debt-free life. There are nearly 45 million student loan borrowers in America, totaling a consolidated $1.65 trillion. When possible, pay off your debt to raise your credit score and increase your chances of being eligible for a better life.