Welcome to the summer edition of Money Matters! The first summer column addresses three simple things a college student can do now to prepare for life after college.
#1: Be aware of the amount of money you spend. Our cashless society encourages spending. When paying by PayPal, Venmo, debit or credit cards, people may spend more than they should. My advice is to make a conscious effort to “feel” when you spend. When I was in college years ago, I paid for everything in cash. Taking physical cash from my wallet and handing it over influenced my spending habits. I am not suggesting you only use cash, but to focus on how much you spend each time you buy something. Think about a typical pre-quarantine day either during the summer or on campus. What did you buy and how much did it cost?
#2: Find one “luxury” expense and spend a bit less on it. The old adage is “Life is for Living” and I am all for enjoying yourself. However, as you are hopefully committing to “feeling” your spending, maybe there is a way to save money each week. Identify one thing that you could live without from time-to-time. This could be your daily coffee, eating out or your evening entertainment or bar options. Is there a less expensive option? If so, can you try to use that lower cost option once or twice a week instead? For example, you would save $3 each time you order a regular coffee instead of a premium cappuccino. For those who are 21 or over, buying wine at the grocery store and imbibing at home on one weekend night is much less expensive than buying wine by the glass at a bar.
#3: Start saving on a regular basis. Unfortunately, many people find saving money very difficult. It is hard to save if a person does not understand how much money they are spending and does not focus on ways to save a bit here and there. This way, a person who makes a conscious effort to spend a little less can see how that effort pays off with increased money in the bank.
These three habits are very powerful tools to use for a person to build financial security over the long run. Why not start them now?
Anna Lubomirski ’21: I think that these three tips are essential skills to have when you are financially independent. College is the ideal time to start learning these skills in order to be prepared for life after graduation. When following these tips, I found that once you learn to save on a regular basis (point #3), then points #1 and #2 will come more naturally. To start, I set a goal for myself to finish each week with a certain amount leftover in my bank account. This causes me to think a lot more about my budget with each transaction I make. While I’m still getting used to my new system, I already feel a lot more in control of my finances.
