Education is paramount for those who are in college. Sadly, it is rare to hear anyone on campus publicly talk about money. Unless a student happens to be studying accounting, it is unlikely they will learn much of anything about managing finances. Although the primary reason money isn’t frequently taught is because of the public’s general ignorance on this topic, the taboo nature of speaking about money in a parlor-etiquette era is also a factor. Because of this lack of education about money, it is often painful for those who go through college only to find themselves poor and struggling because of undisciplined money management skills.
For anyone who wants to supplement their education, check out these five primary money lessons every college student should learn.
5. Start Saving Money
While saving money seems to be common sense, the value of saving money isn’t stressed enough. Saving money is essential for anyone who wants to ensure financial freedom in tough times. We are a culture of debt and putting things on credit cards, but our grandparents knew the value of saving up your money and buying things outright. Being beholden to debt, often at high interest rates that keep compounding, is a very real and tangible kind of oppression. At the very least, anyone who is out of college should try and save at least ten percent of their income. Over time, saving ten percent each month can add up drastically. Additionally, it is a good idea to keep a fund of money that will cover living expenses for six months. This savings money will be invaluable in hard times.
4. Manage Loans Wisely
Managing loans is essential, especially for college students. As a college student, it is often easy to get loans for education and housing. Because of this, one needs to do research in these areas prior to any action; because without this careful planning, one can easily spiral into debt. Don’t take anymore money than you have to. Eventually, you will have to pay it back.
3. Learn to Budget
Budgeting is essential for anyone who wants to have financial stability. Budgeting is necessary not only because it helps reduce expenses, but because it builds financial planning skills and self-discipline with regard to money. College is the perfect opportunity to learn this skill. Most students have little to no income coming in and many things to pay for. They need to be conservative with how they spend their money.
2. Acquire Assets, Not Liabilities
Acquiring assets is the staple of any good financial plan. What separates the wealthy from the poor is that the wealthy have more money coming in through their assets than they lose in expenses and liabilities, and because of this their cash-flow remains positive. There are a variety of assets one can acquire from stocks to real-estate. The sooner one starts acquiring assets, the sooner they will be financially independent. Understanding money and markets can be a good start.
1. Protect Credit
One of the most important, yet least spoken about, aspects of financial security is building credit. The sooner one starts working to increase their credit score, the easier it will be to take out reasonable loans and acquire good jobs. Making monthly payments on time on things like cell phones and utilities can help establish your positive credit record.