They say college is the best time of your life. You finally have the freedom to be your own person and experience new things on a daily basis. College is all about making new relationships and connections while setting yourself up for your future. But what about saving for retirement? This might not be your top priority during your four-plus years in school, and it doesn’t have to be, but it’s something to think about. It’s never too early to start saving for your retirement, and putting a little aside in college can help you get on that path to financial independence earlier than 65. Every little penny counts, and you don’t have to put retirement on the back burner, even as a college student.
The first step is to create financial plans that work for you. There are no universal rules when it comes to saving, so there is flexibility, especially for a student in college. You don’t have to save hundreds of dollars each month, which is honestly not really feasible as a student, but having a little money for a rainy day can set you up for success in the future.
“College is meant to be an exciting and entertaining time. Sure, we all go to gain a higher education in our respective fields, but the experience is more than that. As you meet a new community of people, it is easy to fall into bad spending habits. There needs to be a relative balance between the money you spend on activities with friends and the money you store away to build your savings past college,” says Michael A Scarpati, Founder & CEO of RetireUS.
You don’t have to save all on your own. There are resources out there to help give you advice on effective ways to save so that you can still experience college and save for the future. Here are three tips and tricks to help you manage your money as you take on your college years:
Tip #1: Set Savings Goals
Whether you have the desire to start saving for retirement early or just creating an emergency expenses fund, setting clear financial goals is crucial to staying on track with saving. Maintaining a budget can be difficult, especially with the social pressures of spending. In order to stay on a clear path to saving you need to establish clear goals. You need to know what you are saving for before you can start structuring your spending habits.
Don’t forget to factor in spending for game days or those fun nights out on the town with your friends. It’s important to make your college experience worth it because, quite frankly, it’s a big expense. Setting financial goals shouldn’t prevent you from spending money – it’ll just help you spend more wisely.
Tip #2: Make a Budget Fit for You
Budgeting can be an incredibly confusing process. One of the effective ways to actually stay on a path toward financial independence is to be in tune with your wants and needs. You have to create a budget that fits you, not anybody else. Everyone has their own expenses and goals, so a budget that works for your friend might cause you financial strain.
Separating your wants from your needs is one of the keys to figuring out your personalized budget. It is okay to treat yourself every now and then but not every product or service you stumble upon is a need. One way to do this is practicing the 24 hour rule: Once you’ve found a product or service you like, wait a day and evaluate whether you need it or you want it. This will help you cut down on unnecessary spending and aid in your goal to save.
Tip #3: Plan for the Future
Thinking about the future might seem daunting, but it’s necessary especially as you enter the corporate world. Your immediate needs are what come first, but preparing for your long-term financial goals is equally as vital. It’s never too early to start storing away a percentage of your money to save for the future.
Consider contributing to a Roth account to allow your investments to grow tax-free. Once you set this up and get a job out of college, you can maximize your investments so you are getting the most out of your money. Additionally, look for jobs that offer competitive 401k and retirement plans to set yourself off on the right foot.
There are so many different ways to set yourself up for success when it comes to retirement. Who said you have to be out of college in order to begin thinking about your retirement era? Starting early can help give you a leg up on your financial independence. It’s important to still have a fun college experience, so don’t save too much, but a little goes a long way.
Disclaimer: This content is for informational purposes only and is not intended as financial advice, nor does it replace professional financial advice, investment advice, or any other type of advice. You should seek the advice of a qualified financial advisor or other professional before making any financial decisions.
Published by: Nelly Chavez
