While still completing college and enjoying the freedoms of the student life, the so-called “real world” can feel like a difficult and often unpleasant concept to understand. On the other hand, preparing for a career that often lacks the clear structure of college can be intimidating, especially when extensive financial planning becomes a necessary part of life.
Fortunately, there are many ways to master money management while still in college, and here are just a few reasons why money management can be one of the best skills that you can develop while still in college.
1. Retiring Early
For many people, financial planning is a chore that they would rather put off until another day. Unfortunately, that day sometimes never arrives, meaning that individuals without financial planning in place can hit retirement age and realize that they haven’t saved anything for their golden years. On some level, this type of “avoidance”-style thinking makes sense: Financial planning can sometimes make us consider topics we’d rather not dwell on, such as debts owed, tax payments pending, or the structuring of a retirement plan. Moreover, saving money instead of spending it will usually mean that we’re not having fun by splurging on vacations, new cars, second homes, or the latest tech toys.
However, the benefits of learning how to save and invest money early can be huge, especially if you aspire to financial stability. The possession of a good savings account or investment portfolio can mean retiring early and enjoying the fruits of financially independent living, and it can also mean the ability to walk away from toxic workplaces or abusive bosses. For individuals who’ve developed good saving and budgeting skills, this type of independence and freedom is one of the greatest reasons to master money management early.
2. Navigating Stock Market Hazards
While the proper maintenance of savings accounts should be a foremost priority for any good money manager, the use of investment accounts are also important tools for generating a solid financial foundation. While some individuals opt to dive deep into the market to choose their own stock portfolio, you might want to try finding a quality S&P 500 index or merger-arbitrage fund if you’d rather have professionals invest your money for you.
3. Starting Your Own Business
If you’ve ever dreamed of starting your own business, college can be a great time to network with potential business partners and professors to come up with a winning business plan. Fortunately, business owners can streamline their finances and manage their money with ease by using software to automate finances and create efficient monthly budgets, and with the right tools, business management can be a rewarding experience. For aspiring business owners, the options for creating a successful company are truly limitless!
4. Purchasing a Home
When purchasing a home, a good knowledge of money management can mean the difference between buying a dream house and saddling oneself with an unnecessarily expensive and unmanageable mortgage. A knowledge of interest rates, property values, and home equity can be great factors in finding the right deal on a perfect house, and it can also mean that savvy investors can make a tidy sum after a few years of ownership by selling their house at a profit.
For money management pros, the purchasing of quality property can have the additional benefit of providing passive income in the form of rental agreements with tenants. When properties are rented on a lease or short-term contract basis (as is the case when properties are rented to clients via Airbnb and other platforms), they can quickly generate profits that can be used to pay down a mortgage faster, meaning that investors can soon double their work income without doubling their working hours.
5. Managing Educational Loans
For the average college graduate, the management of student loan payments is a big deal: The average student borrower holds nearly $40,000 in debt, and without the right budgeting or planning, a student loan can become a serious financial drain over time. Fortunately, the right payment plan can help individuals pay down student loans faster than expected, leading to bigger returns on yearly salaries as funds are no longer diverted to cover loan payments. And because student debt also accrues interest over time, you’ll be saving money extensively in the long term if you pay down your loans quickly.
See also Best Student Loan Refinancing Lenders.
6. Helping Others
One of the greatest privileges of developing money management skills is the ability to help friends and family to achieve their goals. If you have younger siblings who are interested in pursuing a college education or have parents who are struggling with making their retirement funds stretch to cover cost-of-living expenses, good money management skills can allow you to help out the people closest to you in meaningful ways. For many people, the ability to help others is the greatest attribute of successful money management.
For these reasons, mastering money management in college can be a great way to pursue your dreams and accomplish your goals. With a good attitude and a willingness to learn new financial skills, you’ll be surprised at the many paths to success you’ll open up. And that is money management done right!
Jasmine Williams covers the good and the bad of today’s business and marketing. When she’s not being all serious and busy, she’s usually hunched over a book or dancing in the kitchen, trying hard to maintain rhythm, and delivering some fine cooking (her family says so). Tweet her @JazzyWilliams88