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Knowing how to manage money isn’t something we’re inherently born with. It takes time and someone explaining to us, usually our parents, the best ways to manage our finances. So, for students who are entering young adulthood, trying to navigate money management can be overwhelming. However, it doesn’t need to be this way. With a little patience and a desire to learn, everyone can learn how to maximize their savings like a pro.
Whether it’s student loans or credit cards, you need to know how to manage your debt responsibly. That said, it’s not uncommon for students to get their first credit card when they’re in college. After all, it’s time to slowly venture out into the world on your own. If you do get a credit card, you need to know how to use it responsibly. You need to use it sparingly, only spending what you know you can pay back in full the next month. Doing so not only teaches basic management skills but will also boost your credit score.
Another important skill, and one of many self improvement challenges you can employ, is how to create a budget. You need to know how to take your total income and subtract all your necessities and wants each month. Say you earn about $1500 a month working a part-time job. You must budget your money so you can pay your phone bill, groceries, and possibly a car payment. You’d need to add up all your expenses, make note of their due dates, and subtract that figure from your take-home pay. Whatever is left can be split in half with 50 percent going into your savings account and the other 50 percent used as you choose.
Even as a freshman in college, you still need to think about your future. Think about your long-term goals and where you see yourself in 10-year increments. Maybe you’d like to own your own home in 10 years, or maybe you’re working towards early retirement. Whatever your goals, create a strategy that you can follow and as time goes on. Keep in mind that as you get older and your financial picture changes, your goals may change as well. Your focus needs to be on saving as much money as possible now, so you can reach your goals in the future.
Investing is no longer only about buying stocks and bonds. There are other types of investments you can make, even if you don’t have a lot of money. There are also apps you can use to get started in investing. But before you do you invest in anything, you need to learn how investments work, the possible risks, and how choosing one over the other will benefit you. You can find free information online that describes the different types of financial instruments, how much you need to invest, and how and when you start seeing a return on your investment. You can also speak to a financial consultant if you have specific questions about investing.
