Are you perplexed about the right age to start saving just like all the other young people?
Does it feel too complicated as to which investment would be appropriate for you?
Well, there is nothing to worry about because managing personal finances doesn’t have any specific age to start with. You can do it whenever you feel like but if you already have started earning then it’s high time that you start thinking about investments!
But, before investing you need to know about saving money, right?
It is quite challenging to save money if you’re still at your college or University but there could be a number of ways that could keep your costs down.
Five hacks to save money especially for students
- You must keep track of your spending:
This is not the job of your dreams but it is crucial to keep a tab on the money that comes in from your scholarships or student loan and the amount of money that you spend over your mobile phone, grocery shopping, rents, and other bills as well.
Sometimes, it might get on your nerves to keep track of every single activity but that is what is going to help you to cut down your costs. There are a plethora of apps available that would help you to keep track, create budgets, and many such useful activities.
So, don’t worry all you got to do is note down all your money related activities and spend wisely so that you don’t go overboard at the beginning of the month and spend the rest of the month penniless.
- Take advantage of student discounts:
Well, there are many book stores and food joints that offer student discounts and it is your right. So, always ask if the outlet or store has any specific offer for students discount because most of the time it is not advertised or given publicly.
Sometimes there are minimal priced coupons available online which help you to get a discount at various stores and those coupons are valid for almost twelve months. So, buying one coupon would be an investment that will help you to cut down your costs easily.
- Go for smart food shopping:
The expenditure on food mostly contributes to 30% of the entire expenditure every month so saving on food shopping will be a great way to save a lot of money. Go for supermarket-value products rather than being a brand-freak!
Moreover, try shopping at the end of the day because a lot of products are at discount during that time. Try a hand at cooking with your housemates or friends. Cooking meals even thrice a week can save a lot of money, try it out for you and see the difference. Another positive attempt for saving money would be to plan your meals in advance.
- Stop overpaying for transport:
You must remember one thing that most universities are either city-based which means they have excellent public transport links, or they are campus-based which means everything you need will be in the near vicinity.
So, it is pretty obvious that you won’t require a car while you are studying. Well, that is definitely going to save you a lot of cash. Now, another good option would be to buy a rail card so that you can take the train regularly – whether you’re visiting parents or friends at other universities.
Buses are always going to be the cheapest way to travel the city around so make sure that you get a regular pass and try to ask for your student’s discount if that is available. This way a lot of your unnecessary costs will be cut down.
- Do not forget to pay your bills on time:
Now this depends whether you are staying in a student-house or in residency apartments. If you are staying in a residency then all your utility bills will probably be included in the rent so that will be easier for you to budget and manage.
But if you home is a student-house which is mostly shared then you’ll be responsible to pay for your gas, electricity, and internet as well, right?
So, you can make arrangements for a direct debit of your bills from your account so that you do not miss the deadline because that’ll cost you an extra charge which is a big NO-NO if you’re trying to save.
Well, if you can adapt these five mantras, then you can cut down a lot of your costs. It will help you to structure your daily life and create a spread sheet or budget. Not only that, this way you will also avoid any unnecessary tension or stress to save money. In short, things will run smoothly.
Now that you have some money saved, it is time to make some investment and that will definitely help your money grow. In fact, if you invest wisely then you can literally live off your earnings and investments.
Always remember to start with small investments like mutual funds, retirement accounts and later on shift to riskier investments such as real estate, and others. So, let us get a hold of the correct places where you can invest your precious money.
Dive into the world of investments
A lot of people think that you need a lot of money to invest but that’s not the truth because you can start as little as $50 per month. They key aspect to building and saving is to develop good habits like putting away some money every month. If you can start investing now, then you are going to be in quite a strong financial condition in future.
Start as simple as putting $10 into an envelope, shoebox, maybe a small safe, or even that legendary bank of first resort, the legendary cookie jar.
Does it sound silly?
But, that doesn’t matter because it’s often a necessary first step. Get yourself into the habit of living on a little bit less than you earn, and try to stash the savings away in a safe haven.
Well, please don’t be because here are few easiest ways to invest with the smallest amount of money possible.
- Heard about the cookie jar approach:
Well, saving money is investing it! By cookie jar approach I don’t mean a cookie jar literally. I was talking about its electronic equivalent which is an online savings account.
It’s separate than the checking account and the money can be withdrawn within two business days in case of requirement but it’s not linked with the debit card.
When you start with small amounts then after a while you can accumulate it and then invest the money in mutual funds or stock market.
- Put your faith in a Roboadvisor:
Have you heard the term Roboadvisors?
They were created to simplify the lives of novice traders to make investing as simple and accessible as possible. Another good thing is no prior investment experience is required for utilising or hiring a Roboadvisor and set-up is easy. Let their automated intelligence track your investments in the background, and pay lower fees in the process.
Here are my top three Roboadvisors:
- M1 finance is an amazing Roboadvisor which doesn’t charge any commission or management fees so it can be used by people who are looking for low budget investments.
Moreover, their user interface is super easy to use and their minimum starting balance is as low as $100 so you don’t have to worry about investing huge amount of money. You can easily choose from one of their pre-made portfolios or customize one specifically for you.
- Wealthfront is for the beginners as well but you need to invest $500 for this Roboadvisor. Their fee is quite reasonable at 0.25% and it will help you to grow your savings at an easy rate!
- Betterment is the most affordable Roboadvisor because here your investment can be even lesser than $100. It is similar to M1 finance and even easier to handle with a completely hassle free approach!
- Invest in mutual funds:
Mutual funds are the perfect thing for new investors. They are hassle-free investment securities which help you to invest in stocks and bonds. In order to get much more out of your savings it is best to arrange some automated transaction debit so that you do not miss out on any instalment!
Automatic investing is a pretty common feature with most of the mutual fund and ETF IRA accounts. It is not so popular with taxable accounts, but it is advised that you ask whether that’s an option for you. It can also be done through payroll savings. So, it is entirely up to you how you’ll prefer to invest in the mutual funds!
- Open a retirement account:
Retirement accounts are a blessing in disguise because they allow you a tax-free way to save for retirement so that you can live in peace during the second part of your life.
The most common options for opening an account can be the 401(k) and the IRA. Don’t be perplexed by the names, they are pretty simple! A 401(k) is set up with the help of your employer, but in case of an IRA you can also open it individually.
You have to be alert and aware because a lot of employers will match your contributions to your 401(k), but only up to a certain amount.
So, you have to aim to always contribute at least as much as you can for the 401(k) that your employer will match, or else you will miss out on all that free money. Now coming to IRA part, here you can contribute up to $5,500 yearly and that will be tax-free.
So the best part is that you’ll be able to pay taxes when you withdraw money during your retirement. Doesn’t that sound great?
So, think before you invest but putting your money in a retirement account is one of the critical steps for securing your future!
Time for technology to take over
Now I guess you are pretty much clear how you should start by saving money as early and as much as possible then you can also invest that money and secure your future. But, the most important part about saving and investing is to keep a track of all your expenses and investments.
Sometimes, it can get really challenging to manage everything on your own, right? Because we all have a hectic and busy schedule right?
But then again you must remember that this is the era of superior technology and there are a plethora of tools gadgets and application to simplify your lives!
Super apps to simplify investment for you:
The easiest and most hassle-free app for all the users where one can start investing as low as $5. Isn’t that amazing?
Stash allows you to invest in fractions of shares, which means you can start with as small an investment as you want. They offer you a plethora of choice from 30 different ETFs which are entirely based on your desired risk, financial situation and lifestyle. The bonus part is that they explain everything step-wise along the way and they even offer certain additional financial advisory services.
The most amazing part about this app is that it is absolutely free! So, technically you can invest in anything with zero transaction charges, folks! Robinhood is basically an app that offers a platform for buying and selling stocks and ETFs with an easy approach. It is literally perfect for the novice investment DIY-ers!
Now, this is an investment brokerage app that allows users to buy shares in percentage and fractions which makes investments less risky and easy to handle. Moreover, there are lower chances of losing the money! The additional feature is that this app offers stock gift cards! Yeah, you heard that right!
Well, I guess this post will help you to take better financial decisions and also guide you towards a secured future through planned investments!
Start saving folks, because it never too late or early!
Michelle Johnson is one of the most reputed professors and has been guiding a lot of students for managing their personal finances. She is known for her unique and innovative methods of teaching. She has more than six years of experience and has an MBA degree from Harvard Business School. She has expertise in financial management and is also a reputed blogger and is quite popular for her easy to understand language.