A well-known writeup on software development stated the following:
Your “use case” should be, there’s a 22 year old college student living in the dorms. How will this software get him laid?
This frank statement hides some amazing truths inside of it, many of which relate to things far beyond software. The key principle, though, is that things that are successful are things that make it easy for people to do other things that make them happy. That’s why college students are notoriously bad at personal finance: it’s not easy and it doesn’t make them happy. Personal finance is often about the long term, and in the sheltered environment of college, the farthest goal in the future is getting a job in a few years – anything beyond that is pretty hazy for almost everyone.
So how can personal finance ever reach out to college students? The only way that personal finance management works in the life of an average college student is if it’s easy and if it brings either some happiness right now or a lot of happiness in the future.
Most lists for saving money in college that cover things like getting only the best loans and how to “optimize” your FAFSA fly right over the heads of most college students – I’m not ashamed to admit that I ignored them completely. These lists must have been written by people who have forgotten what college was actually like.
Given that, here are ten positive personal finance steps that any college student can take that meet all of these criteria: they’re realistic, easy, and they bring happiness both now and later.
Get some free money. Take your semester stipend and put it in an ING savings account. It will take about ten minutes, and if you ask me for a referral code, ING will give you $25. It will earn 4.5% APY interest, which means if you put $2,000 in there now and withdraw it in two months, you’ll get $14.71. The longer you put your stipend in there and the more you have, the more cash you get for nothing. Whenever you need cash to pay the university, you can just click your mouse a few times and get the cash out.
Make it automatic. When you’ve got that ING account, set it up so that it withdraws a few bucks every week from your checking account. The money will be automatically saved for you, a little bit at a time; you don’t have to worry about it or even think about it. Even if you can just swing a buck a day, you’ll wind up with about $400 at year’s end; check out the George Washington plan for more details.
Look for cheaper entertainment. I used to sit in the dorm and play video games all the time and I’d buy a new one about every two weeks. Why spend so much cash when I could have just found a video gaming club on my college campus? It turns out that there was one, with lots of meetups, rooms full of consoles on weekends, and lots of game swapping going on. Look at the list of all of the student organizations on your campus. At most large colleges, there’s one to meet almost every interest; if you’re at a smaller school, get one started: just print up a flyer, hang it up in a few places, and get the ball rolling. You can keep doing whatever you enjoy doing, except you’ll meet new people who like the same stuff and it’s cheaper because you might not have to invest nearly as much in it. Even better: look for interesting free stuff you might not have done otherwise.
Don’t get any credit cards. There’s no good reason to have a credit card in college; just be lazy and don’t fill out the application. If you don’t have the cash, wait a few weeks. I spent five years after graduation dealing with the credit card debt I racked up in college buying stupid stuff; don’t let the same thing happen to you.
Eat in the cafeteria. Eat as many meals as possible in the cafeteria; unless something very weird is going on at your school, it’s much cheaper in the long run than even making your own food, let alone eating out. It might not be gourmet, but it can be incredibly cheap and (reasonably) nutritious, so don’t pass it up.
Look for free stuff. When I was in college, especially in the dorms, I used to get tons of freebies from people looking for my business. If you hear about giveaways on campus, go get some. The same thing goes for on-campus clubs; the biggest thing I regret now is not going to club meetings when they had free food; not only would it have saved on the chow, but I could have met some new people, too.
Empty out your pockets at the end of each day. At the end of the day, dump out the change in your pockets and put it in a jar. Keep building that jar up, then go deposit it in a bank at the end of the semester. I used to keep change on hand for pop – in other words, I’d just waste it. I wish now I had put it in a change jar and cashed it in once in a while.
When you go buy something, ask around and see where it’s cheapest. I used to be a music addict, and for the first year I was in college, I just shopped at the local Sam Goody’s. When a friend finally informed me about a local music shop, we went there and it was about $7 cheaper per CD. I never browsed at Sam Goody’s again, and actually wound up hanging out a fair amount at the local music shop. I also eventually started buying some clothes at Goodwill, once I got over a mental block about how it was for poor people. I was in college; I was poor. This general concept is usually true for about anything; just ask people who have been around for a while where the cheapest places are to buy stuff.
Get an interesting job. Go to the general office for your major and ask if there are any jobs available for undergraduates. If you’re in the sciences, there’s almost always something available; in most other majors, there’s at least a chance of it. Get that job and find out if the things happening there excite you and also earn a little cash. You’ll probably quickly figure out if you’re in the right area with your studies, plus you’ll have some more money on the side and a job that doesn’t sound like you’re a loser when you’re talking to the opposite sex.
Keep yourself up. Take a shower every day. Wear some deodorant. Shave. The cleaner you are, the better you’ll feel about yourself, and the less likely you’ll be to spend money on stuff that you don’t need.
One last thing: if it makes you feel good, do it. This might be a shocking finisher to a list of personal finance tips, but you’re in college, and now is the time to experiment. You’re going to do stupid things you’ll regret later and you’re going to do some great things you’ll never forget. Just keep an eye on the debt you’re going to have to deal with after college; your future self will thank you even more than you can imagine for keeping that debt low.