10 Actionable Steps to Achieving Financial Independence During College
College is a transition period where it’s normal and celebrated to face numerous learning experiences. Although mistakes are expected during this time of growth, college is also an excellent opportunity to set yourself up for financial success in the future.
Whether you are grappling with student loans or striving for financial independence during your college years, here are ten actionable steps you can take to establish a solid financial foundation:
- Start working.
Working a part-time job during the semester, even if it’s minimum wage or just a few hours a week, can have significant benefits for most college students. Not only does it provide you with some disposable income, but it also imparts valuable life or career skills. From learning the value of time and money to gaining essential work experience, part-time employment can be a rewarding addition to your college journey.
Additionally, consider taking on full-time jobs or internships during the summers to maximize your earnings and further enhance your professional development.
To optimize the value you get from working, try to work jobs in your career field or positions that genuinely interest you. Meaningful work is one of the best experiences you can get from being a college student.
2. Apply for scholarships.
Many students have the misconception that scholarships are applied for when applying to college, but the truth is that they continue to be accessible throughout your academic journey.
Every year, take the initiative to search for scholarships offered by your college, organizations you are involved in, and external sources. Scholarships can provide valuable financial and can significantly reduce financial burdens. Thus, always be on the lookout for different opportunities to get more scholarships and apply — it never hurts!
3. Save money for emergencies.
Life is unpredictable, and unforeseen expenses can arise at any moment. Building an emergency fund is crucial for handling unexpected situations without falling into financial hardship.
While saving money during college can be challenging, making it a goal to set aside even a small portion of your income for emergencies can provide peace of mind and financial security.
4. Build your credit.
Developing a strong credit history is vital for various financial moves you may wish to make post-college. For instance, many college students dream of moving out into their own apartments after college. When apartment hunting, landlords often check credit scores to assess financial responsibility. Having a good credit score will help you stand out in competitive housing markets and ultimately get the apartments you’re applying for.
You can start building credit by opening a credit card. Although most credit cards are not accessible to students because most students do not have a consistent salary, there are many student credit cards that are geared toward students. Then, to build good credit, focus on paying bills on time and managing credit cards responsibly. There are many tips and tricks for achieving and maintaining a good credit score, so do your research!
5. Track your earning, spending, and saving.
In college, many students are taking on more financial responsibility for the first time. Without experience, it can be easy to lose track of expenses. Ask any college student, they’ve experienced it at some point.
That’s why it is important to take charge of your financial situation by tracking your income and expenses. Keeping a close eye on your financial flow (what comes in and out of your account every month) empowers you to be informed about your finances. There are so many tools like budgeting apps or spreadsheets that can help you stay organized and on top of your financial game.
6. Set a budget and stick to it.
Beyond just tracking your finances, take the next step and create budgets based on your income and expenses. There are so many small financial decisions we make that can really add up if we are not careful. With a budget, it will be easier to manage your financial goals and spending.
By setting clear financial goals, you can allocate funds more purposefully, ensuring that your money is utilized efficiently. This will enable you to save more without feeling like you are sacrificing your quality of life.
7. Educate yourself on investing.
Investing is a buzzword that we’ve all been hearing thrown around — and it can be incredibly daunting.
While the world of investing may seem complex, taking the time to educate yourself on this topic can have substantial long-term benefits. Learning about investment options and strategies can help you make sound financial decisions, and the earlier you start investing, the more time your money has to grow.
Trust me, it won’t be as scary as it sounds once you actually start reading about it!
8. Open a brokerage account.
A brokerage account provides a platform for you to invest in stocks, bonds, mutual funds, and ETFs. As you accumulate disposable income, consider opening a brokerage account to begin growing your investments and diversifying your portfolio.
The best way to learn about investing is to actually start doing it in your brokerage account. There are many different firms that offer easy-to-use brokerage accounts for anyone. Read up on different investments you can make and devise your investment strategies. Start safe and small to get a good sense of what it really means to invest.
9. Open a Roth IRA.
Roth IRAs are retirement accounts that allow you to save and invest, providing tax-free withdrawals during retirement. Starting to contribute to a Roth IRA as soon as you have some disposable income can significantly benefit your retirement plans, especially considering the challenges of retiring in the current economy.
Even though as a student in college, it’s a good time to start thinking about retirement. These days, it’s becoming increasingly difficult to retire. Time in the market is so valuable when it comes to investments, so start saving for retirement as early as possible to allow for time for your money to really grow. Beware that there are contribution limits to Roth IRAs as well as a salary cap so read about it before you start contributing!
10. Open a bank account.
You will need a bank account to do everything else on this list.
As a college student, if you do not have a bank account already, you need to open one ASAP. You will need an account to spend money, get paid, transfer money, start investing, and more. Your checking account will be for easily accessible money that you may access daily. If you do not have one, walk into a bank and open one today.
You should also open a savings account. Here, you can put money that you do not need to access as often and money that you want to save. Another option is to also open a high-yield savings account (often referred to as a HYSA). Traditional savings accounts often offer minimal interest rates, making it challenging for your savings to grow significantly. However, high-yield savings accounts provide higher interest rates, allowing your money to work harder for you. Keep in mind that this type of account may have limitations on transfers and withdrawals, so allocate funds here that you won’t need immediately.
You got this!
Money can be a scary topic to anyone learning about it for the first time. Yet, it’s critical to educate yourself on all of the different things that any college student can do to set themselves up well as they transition into adulthood.
By taking these ten actionable steps and being proactive in managing your finances, you can set a strong financial foundation during your college years, laying the groundwork for a secure and prosperous future.
Did I miss anything? Let me know if you have any other tips and tricks for setting yourself up well financially during college, I’d love to hear them!
