When you are young and just starting out on your own in the world, you can find yourself very tempted to just live in the now and not plan too far into the future. However, when it comes to money and finances, it is never too early to start planning ahead. Get to know some of the steps that you can take to begin your financial planning while you are still in college and just getting out into the real world on your own. Then, you can be sure that you are ahead of the curve when it comes to your finances.
Do Not Let Interest Build Up On Your Student Loans
The last thing you want to do in your adult life is to start it out deep in debt. However, you also do not want to go without a college education, and sometimes that requires you to get student loans.
While you may not be able to help having to get student loans to pay for college, you can control how you handle and approach them. If you take out student loans, pay close attention to the types of loans you have.
Student loans that are subsidized do not accrue interest while you are in school, but unsubsidized loans do accumulate interest while you are in school. Pay the interest on the unsubsidized portion of your student loans monthly while you are in school so that the interest is not added on to your balance after you are done with school. And, of course, do not take out any more student loan money than you absolutely need to keep your debt under control.
Begin Your Retirement Planning Early
If you are working full- or part-time while you are in college, you can do yourself a big favor by starting to plan for your eventual retirement now rather than later. In fact, if you start saving money for retirement now, you can probably retire earlier than you would have otherwise.
Taking a small percentage of every paycheck (say between three and ten percent) and putting it into a retirement planning account like an IRA or even an interest-bearing savings account will be more than enough to get you started. This is because interest will continue to build on that initial amount you put into the account, as well as any additional money, and then the interest that is paid into the account will also accrue interest.
So, if the account you invest your savings in uses compounding interest, a $50 per month addition at an interest rate of one percent and compounded once a year would be worth over $20,000 in 30 years. This is assuming that you only continue to add $50 and you continue at a very low interest rate on your account. However, you can see how even a little bit of savings starting early on can make a huge difference going forward.
Now that you know a few of the ways that you can begin your financial planning while you are still in college, you can get started right away and make sure that you are doing everything you can to protect your financial future.