College is the place life begins for many of us. In college, we live in the moment, for the moment. So we spend money faster than we earn and we incur more debts than is usually necessary. Also, we make financial choices in college which affect us for the rest of our lives. We sometimes do not make these choices for the sake of making them, we usually do not know any better. Here are seven of the most important things I wish I had known about my finances in college.
1. Making Sacrifices
It is essential to learn about making sacrifices very early in life. This is because it affects many aspects of our lives. So there is no better place to start than college.
When in college, we have many opportunities to make sacrifices. It could be in the form of choosing to skip a junk meal and save a dollar, or choosing between working summer jobs and going to the Bahamas. These kinds of choices present us the avenue to learn discipline as well as how to make beneficial sacrifices.
When faced with these types of choices, the smarter one is always that which saves you a few extra bucks even if you did not have to save.
2. A budget is man’s best friend, or at least, one of his closest.
When many young people in hear the word ‘budget’ they cringe at it as if it was voodoo or a bad word. But, this cannot be further from the truth. A budget is one of the best things that can happen to you, particularly if you start off early. Living on a budget allows financial discipline and responsibility. This sets you up for even tougher choices when you get out of college. In real life situations, a budget can be the thin line dividing a person that goes on to leave a financially stable life and the man that goes bankrupt.
3. Avoid student debt unless completely unavoidable
Debt is like a bad habit. You ease into it gradually without even knowing. It gets comfortable and you keep at it like there is nothing wrong with it. By the time it becomes an actual problem, you are already neck-deep. The same way it takes years to break a bad habit, it takes a lot of time and effort to pay off student debt.
Unless it is absolutely necessary to pay for things like tuition, room, and board, avoid student loans. Hard work does pay. It could even pay the bills if you can work hard enough to get good grades. With good grades, it becomes easier to get yourself a great scholarship.
If you are already in some form of debt, it’s not the end of the world. You need to re-strategize, work a budget, get on a repayment plan and you could start paying your way to financial freedom in installments.
4. Investments are so important
Investments are one of the major keys to experiencing success financially. You need to start investing right now. It’s never too early to invest. The good thing about investments and starting early is that most investments take time to give a valuable return on investments. So, the earlier the investment, the sooner the return on investment (ROI) starts to add up.
With a good ROI on a three-year period, you do not have to get capital to begin or start your own business from an external source. Another form of debt is thereby avoided.
5. Stop building castles in the air
You need to realize that life almost never goes as planned. While college is an important step towards living a successful life, it is not a foolproof plan. There is always the chance that life will happen and upset the balance in your perfect plan. Recognize that people do not stumble onto money, fame, and success like in the movies.
So, apply yourself. Accept that to enjoy financial freedom, you must work hard at it, daily, consistently. Fortune only aids the brave…and the hard working.
6. Passive income
You can earn money while in college. It also does not involve skipping classes. Passive income is that income earned from jobs you are not materially involved in. It could be a writing job on the side, earning money from doing tasks you would do anyway, putting your photography jobs online and making money from it or something else. There are several resources out there on passive income. You can check out some here.
7. Increased income does not have to translate into increased spending
Whether it’s from passive income, returns on investments, refunds or an increase in your allowance, an increase in your income should not necessarily become an increase in spending. The same way you manage your basic income should be the same way you manage your extra income because they all make up your finance.
While knowing these seven important things is not an assurance that you will become the next Billionaire, it’s a step in the path towards a life of financial bliss.