Saving when you’re a young adult can be tough, but it doesn’t have to be.
I have always been vigilant when it comes to my personal finances. I am fascinated by the concept of investing and having your money work for you, where saving now can amount to incredible future wealth. This knowledge and understanding, however, did not come to me overnight. I have a college degree in business, where I took finance and accounting classes, and a father who works in the finance industry, who I poke for clarifications and explanations about nearly everything! I have found this knowledge to serve me well, especially in college, where I was able to grow my personal wealth through investing, saving, and earning money through internships, part-time work during breaks, and my job at our college library. I wanted to share the information that I learned and knew that my good friend James, a fellow Babson College graduate, would be an excellent person to contribute advice on the matter. James is one of the savviest people I know, who has turned his interest in finance and investing into a full-time job as an investment portfolio analyst at Wells Fargo in Charlotte, North Carolina.
When coming to Babson, James’ initial interest was not in finance, but rather entrepreneurship. Yet, when James took Principles Finance with Professor Bliss he was instantly hooked. Principles of Finance was the first class that James took that he found to be really challenging and related to a subject that he did not know much about. James soon took all the finance classes he could register for and quickly became adept in the subject. One of Jame’s favorite aspects of finance is that he can walk into a room with finance professionals and finds that he always learns something new. Although James still desires to start his own business in the future, he is currently focusing on learning all he can about the finance industry, so when the time comes, he’s got the finances covered.
Applying to College
Jame’s first piece of advice when applying to college is taking the time to apply for scholarships. If you can get a scholarship your ROI- return on investment– will most likely pay off. For example, if you spend 3 hours on a scholarship application and you earned $5,000 in financial aid assistance, you have essentially made over $1,600 per hour of your time! That’s definitely above the going rate for any entry level job I know of! James also adds that when you are in college you can continue to apply for scholarships and aid to help lower your costs overtime. Every year you can re-engage in a dialogue with your college in order to potentially reduce your cost of college, if they feel you deserve more aid. You can do so by accessing your college’s financial appeal form.
Establishing Credit History
One piece of advice that I have learned from my dad is to pay yourself first. After every pay check, it is important to set some money aside for yourself to save or invest before you go out and spend all of your hard earned money at once. Think of it as an investment in yourself and in your future. With more money in your pocket, you can be prepared for anything that comes your way and life can definitely throw you the unexpected when you least expect it.
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One point that James and I definitely agree on is investing in broad market index funds or exchange traded funds (ETF) over investing in the specific stocks of companies. The reason for this is that passive investing- meaning you invest your money with the forethought of holding for the long term, has historically yielded better results as opposed to active investing- picking and choosing stocks to try to beat the index. Doing this requires an incredible amount of time and energy to do thorough research on when and what to buy and sell. You really have to be an expert in order to be proficient in active investing, which incorporates greater risk in the individual investments.
Invest in Yourself
Invest in yourself, there is no limit to a potential opportunity.– James
Some of the most important advice James highlights is to invest in yourself first and foremost. James states that you only need one door to open to be successful, so it is crucial to put as many doors in front of yourself as possible. College is what you make of it, so take advantage of all of the resources that are available that are free and can help you develop professionally and personally. James notes going to free conferences, getting his resume reviewed, and hosting all expense paid college gatherings as some of the ways that he was able to maximize his time spent in college.