Editor’s note: This evening I decided to publish a guest post by my young(er) friend Kevin Watts. You may have come across him; he is the creator of GraduatingFromDebt where he blogs about not getting in debt when at collage/university, paying off debt if you manage to build some and making a dash towards financial independence. This post teaches students how to get better value out of their degree by learning money management while studying. It’s a no brainer, really! Thanks, Kevin; and I hope you enjoy the post. If you do, send it to your children, to your nephews and nieces and/or any student you know.
Being a college student or recent graduate usually means that you are learning about managing your finances and how to get a handle on them. Financial management is about reducing expenses, but also about reducing risk. Both can save you money, some now and some in the future. When you are in college, or freshly out of it, is the time you spend planning much of your future. Consider these money saving tips in your planning.
You have probably heard this one twenty times already. That is because it is so important and helpful, which is why it is at the top of the list. Your budget can be in a planner, on paper, in a computer, on a template, or in a software program. Putting down your expenses in a format you can see makes your finances more tangible. This helps your actual situation sink in on a new and deeper level. Divide all of your expenses into categories and allot appropriate amounts to each. If you come up with a negative number at the end, then you have a problem. The whole idea is to ensure that you are living within your means. This gets you out of trouble before you get into it.
Get kitchen tools
If you are in college, you might just want a small fridge for snacks and milk, maybe a coffee maker or kettle, and a few other things so that you are not eating out all the time. In college you are mostly trying to avoid snacking out. When you enter the “real world” and get yourself a new job and a new apartment, you will now be trying to avoid eating out, as in meals at restaurants.
It is so easy to eat out all the time. Going out for lunch and dinner is a great way to get to know some new friends and colleagues. This always takes a chunk out of your budget though. To ease the situation, invest in some kitchen tools like pots and pans, one good chef’s knife, one good small knife, and a few spoons and spatulas. You can get a lot of this stuff at thrift stores. The one you might want to shell out on is the chef’s knife; it really makes the difference between enjoying prep and avoiding it. Once you have a few of the tools, then find some recipes. You can get these from recipe books, find some online, or watch The Food Network; then get cooking! This can still be a great social activity. Have people over and cook for them. They will love it when they do not have to either cook or tip the server. Drinks are way cheaper this way too.
Unexpected medical emergencies are the No. 1 cause of bankruptcy. Make sure you have sufficient medical coverage, it could be invaluable. College students can stay under their parents’ health insurance plan until the age of 26. There are also Student Plans you can purchase; these vary from school to school and state to state. Once you have graduated, you will probably get coverage through your employer.
Ask questions and make sure you have the coverage you need. A medical emergency can be the difference between you graduating and not graduating at all. You will want about $500,000 in coverage, nationally, including inpatient and outpatient services, physical therapy, and prescription drugs. Find out when coverage starts and stops and if it lapses over the summer, when you are not in school. Find out about grace periods and which doctors and hospitals you can go to, sometimes you can only go to specific ones.
Get off the hedonic treadmill
This is the one you want to avoid at all cost. Try to stay off of it. The “hedonic treadmill” is a theory about why a person never seems to be happy even though they gain more and achieve more. It is a good one to be aware of.
In college, one “A” is never enough; you need to get straight “A’s,” and every time you get a new friend, you need to find another. Once you graduate, you get a new apartment and you want to furnish it. You get a nice couch, but you still need more. The next question is: do you buy the big-screen television to go with the blue-ray player, or do you buy the blue-ray player to go with the big-screen television? Then you need speakers and a stereo. Are you happy now? You probably never will be. You can always get a new thing, a new car, new clothes, and a better job. Get off the treadmill, and enjoy and take care of “what you got”.