College Connect: College Students Advised to Start Saving Early

Posted By Crystal Beasley

By Nate Harris

Though some college student may work part-time jobs during school, for many, their first job outside college is their first steady flow of sizeable income. It’s also when many face a plethora of personal expenses, from rent and utilities to food and gas. Some might also enter the professional world with thousands in student loan debt.

Yet, despite the struggle many might face of funneling money from their newfound income to pay the bills, it is important not to overlook saving for the long term.

“Start as early as possible,” said Joan Koonce, a professor and financial planning specialist in the College of Family and Consumer Sciences at The University of Georgia. “That’s the first thing I would tell people.”

Koonce emphasized the importance of getting into the habit of saving early.

“Many [students] will say ‘Well, I don’t really have anything to save.’ But you can start small and get into that habit,” she said. “And as you accumulate more and more, you’re in the habit of saving, so you’ll continue to save more.”

For students like Daniel Bignault, a senior at the University of Georgia who is about to graduate, setting aside money is difficult given his small income.

“I spend most of what I make on gas, groceries, or non-necessities. I’m not living paycheck to paycheck, but I’m not really putting away money either,” he said. “It’s kind of embarrassing, because I could have put away at least small amounts if I had been more responsible.”

Bignault said he plans to begin saving when he gets his first job out of college, and expects to open a retirement account. He said he would likely be below the average age of when most people begin saving for retirement.

Koonce agreed that Bignault would be early compared to some of the people she has assisted during her time as a financial professional, including some already in their 40s or 50s without any savings.

Debt can be a big hurdle for many coming out of college, one that Koonce said should be faced head on immediately to prevent it from being a savings obstacle.

“When you first graduate, I think the first thing young people should focus on is trying to pay off the debts they have,” she said. “Most people are never going to get completely out of debt, because most people are going to buy cars and homes using debt, but paying off credit cards and learning how not to have the attitude of immediate gratification, needing to have everything right now.”

A rainy day fund is also an important thing to have set aside, Koonce said.

“It’s recommended that people have set aside at least three to six months’ worth of expenses in an account, so that if something happened, then they would have some money to fall back on,” she said.

Bignault is graduating with no debt, and has already built a small emergency fund even though he had said he wasn’t putting away money. The money he has accumulated is enough to “get me out of a small hole,” he said.

Once someone has dealt with their debt and established their savings, then it is time to start investing.  She suggested having at least $5,000 in the bank before becoming an investor. “If you only have $200 you can set aside now, don’t go out and try to start investing it, because you don’t have sufficient money to start,” she said.

For those who meet Koonce’s threshold, she recommends setting up a mutual fund and investing money every month. But she advises against going alone and recommends hiring a professional financial planner to build an appropriate investing strategy.

The key factor for anyone staring into their financial future is getting started, and Koonce emphasized there is always some money that can be saved.

She shared her personal experience of working three jobs as a single mother through graduate school at The Ohio State University, before eventually taking out student loans.

“When I graduated and came to UGA for my professional career, I had lots of debt. I could barely afford a car and pay rent, but I decided at this point to start seriously saving,” she said. “My mom always said, ‘No matter how poor you are, you can always save something.'”

Nate Harris is a student at the Grady College of Journalism and Mass Communication at the University of Georgia.

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