In an ideal world, we'll all graduate from college and immediately have an incredible job that lets us pay off our student loans right away. Sadly, this is a tough gig to find. Even a great and well-paying job will still require you to budget and be intentional with your spending. Luckily, you can help future-you out a little by being a little more financially responsible now. Here are five easy ways to get started right away.
1. Get a savings account with a good interest rate.
You don't necessarily need a credit card, but you definitely need a checking account and a savings account. If you don't already have these, get them. And try to get a savings account with a good interest rate (i.e. the percentage of your balance that your bank will pay you for being a customer). For context, the average savings account annual percent yield (APY) is around 0.10%, so if you can find one higher than that than you're in a great spot. There are some online banks with higher rates and with low or no minimums, such as Ally, so that's one option if you don't care about having a brick and mortar bank.
2. Put $5 in your savings every month.
Or more if you can. Whatever the amount is that is possible for you, do it. Some money saved is better than none, so don't think 'what's the point' to the $5 per month. If you saved that much each month throughout college (assuming 4 years) you'd have $240 at the end, not including interest. If you bumped it up to $10, you'd be at $480. Or if you went to $15 you'd get to $720. The point is, you can make small savings deposits and make a big impact on your future finances. Plus, it'll divert the money from your checking account, where it may feel like it's "there to be spent."
3. Make it feel like a treat when you treat yo-self.
Now, I get it. Sometimes I just need my favorite drink from Starbucks (espresso over ice with a splash of soy milk) and a spinach-feta wrap. Sometimes you just have those days. Or you're waking up at 3am to finish a paper you definitely should have finished a week ago, and you just need a treat to get yourself through it. That's OK. But just make sure your "treats" don't turn into a daily occurrence -- really make them count. For one, if they're too frequent, they won't feel like a special occasion anymore. But more importantly, you'll get in a habit of spending money regularly that you really don't need to. Eating out is the biggest money waster, after all. So if you feel yourself getting into a cycle, then ask yourself, "Do I really need this today?" That should hopefully give you some perspective and prevent you from indulging on a regular basis.
4. Educate yourself on financial terms that you’ll encounter in the future.
It's unlikely that a college student would open up a retirement account at this point in time (it's great if you do!), but it's important to understand what you're doing when you get to the point that you do. Hopefully your employer after college will have a 401(k) program, in which case you should absolutely, without question sign up for it. The average amount saved for retirement in CA is over $227,000, so the earlier you can start building to this, the better. If you do get offered an employee 201(k) program, you should understand your options. Plus, there are plenty of other life events that require some sort of financial product in the mix. Read up on retirement accounts (401(k)s, IRAs, etc.), different types of these accounts (traditional, roth), types of investments (stocks, bonds, mutual funds, etc.), credit card terms (interest rate, minimum payment, etc.), and any other financial product you think you're likely to encounter in the future. You can never know too much about your finances.
5. Pack your backpack or school bag with snacks.
This is one of the simplest tips I can give you. Who hasn't bought an overpriced food item at one of the cafes or shops on campus because they were starving and unable to run home? I used to live in Pasadena, so I had to really plan out my food. Still, sometimes it's impossible to plan your meals perfectly. Meal prep is a great idea, but it's difficult on a college student's schedule. So what you can do is load up your school bag with a few favorite snacks of yours -- granola bars, chips, raisins, or whatever you like best. It'll give you a few options to eat, so when you're starving on campus you won't have to buy an overpriced and ultimately disappointing bagel.
