View All Blog Posts
August 13, 2018
You’re in college and you’re learning all about history and biology and engineering and anthropology. You work out, go to school and play intramurals. You volunteer. You have a job. You sleep in. You go out. You eat in the dorm, in your car and in your apartment. Jimmy Johns! Pizza! Drive thru. Take out. There are places to spend money everywhere. Get your hair done, take a road trip, see a movie, go out with friends. Uber. Lyft. ATM fees. Where is my money? How am I actually affording all of this?
And how do you even begin to think about how to manage your money at a time when it feels like you have none? It’s never too late to start.
Here’s what people who are 10-15 years ahead of where you are now said you should know:
- Start saving early. Even if just a little bit. Money grows over time. Learn about compound interest. Earning interest on your money starts slowly at first but picks up steam as time goes on. For example, if you started saving today with $100 and deposited $50 a month for the next 10 years earning 5% interest on your money, your investment will be worth $7,962 in 2028. That is $1,862 in free money! If you keep going and reach 25 years, you will have spent $15,100 on your investment and you will have earned $15,151 in interest. That is $15,151 in free money!
- Work on building your credit. By credit, we mean credit score, not revolving credit card debt. A credit score is a number assigned to you that indicates your capacity to repay a loan. Bad credit scores are below 600. Excellent scores are between 781-850. Open a credit card with a low interest rate. Buy a few things. Pay it off. This is how you start building a good credit history which will eventually affect all aspects of your financial future. A free copy of your credit report can be requested annually at AnnualCreditReport.com.
- If you have debt, pay it off and don’t accrue more. Start with whatever balance is charging you the highest interest rate. Keep going.
- When you get a “real job” after college, your employer might offer you a 401K plan. This is a fancy IRS designation for a savings account for your retirement. The best part is, most companies put money in your 401K right alongside you. This is more free money and you should always, always take it! With compounding interest this is your quickest way to build wealth without even trying.
- If you need a loan, shop around. Sometimes your college doesn’t provide the best financing options. Do your homework and compare rates at two or three local banks or credit unions. Financial institutions provide a lot more options to help you meet your financial goals than universities do. Talk to a person. Ask for help if you need it. Look for free resources from reputable sources online.
- Budget and live within your means. How do you make a budget? You write down how much money you make. Then you subtract the things you have to pay for each month (tuition, housing, food, car payment, gas, etc.). What’s left is your discretionary income. If you have money to spend, you can spend it. If not, you’re home watching Netflix and eating ramen noodles, again. Don’t forget to budget for savings as well.
If you are interested in learning more about getting set up for financial success with a local bank, we would be happy to help you! Contact Patti Kahre at American National Bank in Omaha at PKahre@anbank.com.
The Millionaire Next Door: The Surprising Secrets of America’s Wealthy (2010)
Rich Dad Poor Dad: What the Rich Teach Their Kids About Money That the Poor and Middle Class Do Not! (2017)
Smart Money Smart Kids: Raising the Next Generation to Win with Money (2014)
Paige Dempsey, on behalf of American National Bank