One matter that many young professionals agree on is that they would have started saving and managing their finances sooner had they known that the challenges of living their own life would be difficult. If you’re an 18-year-old freshman in college, you might not even be thinking about this yet. After all, there is still plenty of time for you to save money, right?
Unfortunately, this is not often the case. Life comes with plenty of unpredictable complications that you need to be ready for as early in your life as possible. Making money is hard, but with the right habits and preparation, managing your finances can become second nature over time.
In this article, we will share several practical financial advices from the best African American financial advisors:
1. Get into banking and credit cards as soon as possible
There are plenty of offers available to students as early as their first year in college. Banks sometimes even come to visit and hand pamphlets and other educational materials about their banking offers. Many financial advisers also have lessons and classes that are highly accessible to students and professionals of any age.
Many students actively avoid this responsibility, but the earlier you get a start on building up and improving your credit, the less likely it is to dip into unmanageable levels. Buying items with a credit card (and paying on time) can help build up your credit score, which will be important if you want to take out a loan, see the purchase of a car and home, and want better rates on insurance in the future.
Keep in mind that it isn’t just about having more time to fix. Around 15% of your credit score is determined by how long you’ve had credit, and your payment history determines 35%. This essentially makes over 50% of your credit dependent on time.
Since your income is limited at a younger age, it is best to choose a card with no annual fees. There are plenty of options out there for students that give them the flexibility and terms to manage their finances better.
2. Track and reduce your spending
Overspending is one of the most common mistakes in budgeting. If you don’t do the math, you are likely to spend beyond your means, even if it is for school supplies.
If you find yourself regularly running out of money, be sure to take a good, hard look at your spending habits. Maybe you don’t need to buy that 4-dollar drink every day, which results in a spending of $120 monthly. Try to balance your spending on luxuries. Although it’s not wrong to purchase items that make you happy, they shouldn’t make you sad when it comes time to pay the bills.
Maybe you don’t need the 300-dollar new copy of that textbook; after all, used copies can be just as good for a fraction of the price. Try to look into student discounts as well, as many establishments actually provide one if you are able to show proof.
Depending on the organizations you join as well, they might offer freebies and discounts on certain student amenities. For every expensive purchase, try to ask older students how they came to use some of the things they thought they were required to buy. As with the books, it might be better to buy them secondhand from senior students.
When it comes to your finances, there is no better to start than now. Keep in mind that your financial well-being is something you should be thinking about as early as possible, as it can affect your lifestyle heavily down the line. Work on your credit early, make budgeting a part of your habits, and learn to spend within your means.
If you need the help of an African American financial adviser with your financial goals, send us a message. We have the expertise to help young black Americans set up their lives more responsibly so that you’ll have a stable future.