Many students will agree that their financial situation in college isn’t exactly overflowing. Often, you’ll hear students talking about being “financially strained” because they have to juggle school and part-time work, which usually doesn’t pay much. Because of this, investing is rarely a top priority for most students. However, college is actually a great time to start investing, no matter how much you’re earning. Here’s why:
**You Have Fewer Financial Burdens**
A lot of college students are not married and don’t have kids to support. Some even get financial help from their parents specifically for tuition. If this sounds like your situation, you might find yourself with some extra money, even if it’s just from a part-time job. The investment world often follows a risk-reward philosophy—the higher the risk, the bigger the potential returns. Investing in riskier assets could lead to significant financial gains, as long as you’ve done your research. Being single and without big commitments like a mortgage or child-related expenses, you have more money to invest and more opportunities to take advantage of.
**Investment Can Be a Safety Net**
Graduating often means taking on a large amount of student loan debt. Many graduates end up spending a big chunk of their income on paying off these loans, sometimes for over a year. This is why many young adults struggle to buy homes or save for retirement since their earnings are tied up in loan repayments. But if you’ve already invested a good amount, loans and debt might seem less scary. Smart investments can generate profits that help speed up your loan repayments. And in case of emergencies, a solid investment portfolio can offer financial security, even though it doesn’t replace the need for an emergency fund.
**Save by Default**
Many young people delay saving until they get a job with a steady income. But you don’t need to make a lot of money to save. Savings can benefit you, no matter how small the amount. Investments can encourage you to save even more. Start with small investments to grow your money over time. For example, consider investing in a 401K if your employer offers it and matches your contributions. If this isn’t an option, there are plenty of other low-risk ways to grow your money.
**Could Your Money Be Spent Better?**
Many students find themselves living paycheck to paycheck, spending extra money on non-essential items. Putting money in a savings account might seem boring when your friends are out having fun. But why not get a head start? Time is your greatest asset when it comes to investing. The sooner you start, the more your investments will grow, setting you up for a strong financial future. Invest your extra cash, no matter how small the amount. Your responsibilities and expenses are likely lower now than they will be after graduation, so seize this chance to improve your finances. Take some risks, aim for high returns, learn from your mistakes, and get comfortable with saving. This will give you an edge when it’s time to pay off student loans or buy your first home.
Have you invested any money while in college? If so, how did you choose your investments?