It’s easy during these four years of college to simply focus on pursuing an education. Students assume that if they focus on their education and making the right connections, they will get the right jobs. Those jobs will provide them with enough income, and that income will support their desired lifestyles. But students don’t have to wait until graduation or the right job to start thinking about finances.
Keith Cameron Smith, author of “The Top 10 Distinctions Between the Middle Class and Millionaires,” shared 10 characteristics of millionaires. Number 10 was, “Millionaires think long-term. The middle class thinks short-term.” He says the very poor think day to day, poor people think week to week, the middle class thinks month to month, the rich think year to year, and the very rich will plan by the decade.
How can students start thinking about finances now and plan for decades to come? Hillsdale economics professor offer their advice on how a student can prepare for better financial stability after college.
Follow simple steps for financial success
Associate Professor of Economics, Herman A. and Suzanne S. Dettwiler Chair in Economics, Charles Steele:
“First, make it a game to see how little you can get by on. Spend as little as possible. Second, save. Third, never consume on credit. Borrowing for investing in something that offers future returns can be a good idea sometimes. Borrowing to consume, to boost one’s current lifestyle, is self-destructive. If a student starts number one and number two now and makes them his or her lifestyle, their chances of being financially independent increase enormously.”
Use budgeting tools
Associate Professor of Economics, Wallace and Marion Reemelin Chairman in Free Market Economics, Michael Clark:
“I can’t imagine actually having money while in college, but if I had to give some advice for college students it would be to get a budgeting app for your phone. I would do this not so much to limit or slow your spending, but to start to really appreciate where your money is going and to see if that aligns with what you believe are your priorities.”
Stay out of debt
William Simon Professor of Economics and Public Policy, Director of Economics, Professor of Political Economy, Gary Wolfram:
“Don’t use your credit card unless you can pay it all off at the end of the month. Use it as a a short-term, 30-day loan. The less debt you can carry the better. Debt for something productive in the future like a house is okay. If you’re going to buy a car, you ought to buy a used car with as few miles as you can afford. New cars are so expensive now days you’re not going to buy that anyway. And invest as soon as you can. If you have a job and they match your 401k or if the company matches it, you should put in as you can.”
Don’t keep up with the Jones
Visiting professor of personal investing, Joe Banach:
“Since each person is unique, I don’t have a simple formula for how to improve one’s financial situation. Yet, simply, if we live within our means (moderation) and understand the investment fundamentals, such as appropriate research and understanding our own risk tolerance prior to making financial and investment decisions, that is prudence, then we should be able to live stable, self-reliant lives.”