This is a guest post from the Studenomist of Studenomics. A resource for twenty somethings that want to be informed about money management without all of the boring rhetoric. If you enjoy this article then please consider subscribing for free updates.
As I enter my final year of college I’m very thankful for the financial skills I have developed over time. However, I had to learn these financial skills the hard way. Today I want to tell you guys about what I wish I knew about managing my finances before I started college:
Any income is a good income. As a teenager, I thought certain low wages weren’t worth my time and instead chose to meet with friends. Together we would find ourselves spending money on foolish things. After a little bit of reading and a kick of common sense, I realized that accumulating money is usually a slower process than it’s portrayed in the movies.
Whether you begin saving $50 a week or $50 a month, the simple act of saving will improve your financial life more than most college students. If you have so much student debt you feel you can’t save money, do not worry. You can still improve your financial situation by slowly paying off the debt as you go. You will really thank yourself for this when you graduate from college with minimal debt or no debt at all.
It’s not how much you earn that matters, it is how much you save that counts. There are only 168 hours in a week. You can try to fill up as many of those hours as possible with work but at the end of the day you need to learn how to save more money. If you get used to earning lots of money and spending lots of money then what will happen if you ever pursue an entrepreneurial venture and experience slow periods of income?
Sure after you graduate from college you could work 70 hours a week and earn $50,000 a year. What’s that worth if your bank account is empty at the end of the year? I could go on with clever anecdotes and examples but I will stop right here. What you earn isn’t impressive, it’s what you save that should be impressive.
Best way to track your spending is by writing it down. You may feel totally in control of your money but do you really know where it all goes? I thought I knew where my money went until I tried tracking it on my cell phone one day. I was brutally honest and kept track of every penny that I spent. After a few weeks it came to my attention that I had many leaks in my budget.
Saving money reduces stress. Having money saved up for life’s little surprises helps me sleep better at night. Whether you want to call it an emergency fund or money for a rainy day, the money reserve will help you financially deal with emergencies.
I have friends that are worried to death about what they would do if something went wrong with their car. Why? Because they have no money saved up to deal with deviations from everyday life. If you absolutely refuse to take saving money seriously because you want to enjoy life then please consider at least saving money for a rainy day.
I will stop writing here so you guys can get back to whatever else you were doing. All I ask is that everyone try to share one thing they wish they knew about managing money before beginning college. I would also highly recommend reading 12 things I learned by 42 but wish I knew by 22 by Ron.