College is fun, but if you're not careful it can be a breeding ground for bad financial habits. It's been almost two years since I graduated and I'm learning the realities of post-graduate life are much different than life inside your alma mater.
So without further ado, here are the 5 things I wish someone had told me about money while I was still in college, hopefully they are helpful to you.
1. Pay back the interest on your student loans while you're still in school.
You may not know this but your loans are earning interest while you are going to school. Interest is how the bank makes money for loaning you it's money. Not only are you loans earning interest, but that interest is being compounded.
This means after you graduate and start repaying your loans, you will now be paying back— with interest— the amount you originally borrowed (a.ka. the principal) + the interest your loan earned while you were in school (compounded interest).
So even if you didn't fully understand what I was saying, the moral of the story is get acquainted with your student loans now, hop on Sallie Mae's website (the largest student loan lender), and start paying back your interest. A few hundred dollars now may save you thousands of dollars in the future.
2. Save something, anything.
This is more for principle than anything else. You likely won't be making major contributions to your life savings while still in college, but getting used to saving a portion of your paycheck is a good practice for the future. Start with small amounts, deposit 10% of your paycheck into a savings account or if you want a fun way to save try the $5 savings challenge. Every time you get a $5 bill don't spend it, save it. A little bit goes a long way when it comes to saving, so the important thing here is to simply get started.
3. Start building a quality wardrobe.
4. You can't afford to drink Starbucks everyday.
This is a shocker for a lot of people our age who grew up with a weekly allowance and a shop 'til you drop attitude. When I first got to college all the Freshmen had to attend a Financial Aid workshop where the speaker told us flat out, you can't afford to drink Starbucks everyday. I remember being annoyed. Now I wish I had listened.
The truth is you are in school so that you can one day get a decent job. When you graduate, get that job and finally earn a steady income then if you choose to spend your money on a latte at Starbucks—be my guest. But the reality is as a college student there are a lot of things you just can't afford. So stop living like a millionaire and show a little restraint every now and then.
5. A part-time job never killed anyone.
I worked on and off my whole college career— I worked as a yogurt store attendant, a university notetaker, a babysitter, camp counselor, and even a shuttle bus driver. I know you think getting a part-time job is going to ruin your college experience which is all about having fun, going to parties, and signing up for 10AM classes, but really a part-time job means money, which in the end means freedom.
Making your own money means you get to make your own decisions.
Sidenote: Earning some extra spending cash is a nice way to thank your parents for helping you out with your education, and more importantly proves to them you are evolving into a competent adult.
Featured image via Harry Briggs.