By Brittney Butler
It is rare to find students with enough money saved in the case of an emergency, according to a personal advisor at a large regional bank.
“You have a friend who always invites you to go get dinner and then complains that they only have $2 the next day,” said Christopher Ray, a SunTrust Bank personal finance advisor.
Ray said most students should aim for having anywhere from three to six months of their monthly income put aside in a savings account in case something happens with their living situation, car or health.
“You need to save some of your money aside for everyday living and emergencies until you get a job,” Ray said.
Imagine that friend again. Maybe they go out to eat too much, buy too many clothes or pay $200 for nosebleed seats to a concert where they will barely be able to see the band. While this spending narrative is the reality for many college students, University of Georgia junior finance major Drake Hutzell has a different relationship with his money.
Hutzell was recently in the middle of the Tate Student Center checking his phone while having conversations with the people around him, but he wasn’t looking to see if he had enough money to get fries from the Chick-Fil-A around the corner.
He was checking in on his investments.
“Recently I’ve gotten into stocks because I realize that my money is losing value if it’s sitting in a bank,” Hutzell said.
Over the summer, Hutzell worked with the WinShape summer camp. After saving his earnings, he began investing in stocks last June with two apps on his phone and some skills he learned from YouTube videos.
“I’m mostly self-taught,” Hutzell said. “It’s just a lot of trial and error.”
He first began by using Acorns, a micro-investing service where users deposit money into an account and choose one of five pre-made investment portfolios. Hutzell uses his Acorns as a savings account earning up to 3 percent interest a month. Most savings accounts at banks earn only 0.01 percent a month.
He began using Robinhood a month later which allowed him to invest in individual stocks and engage in day trading. Day trading is buying and selling financial instruments like stocks and bonds within a short period of time with the intention of making money through small price fluctuations.
“Day trading is not for everybody,” Ray said. “It involves much more attention than working with an advisor.”
According to Ray, apps like Acorns and Robinhood make investing in stocks accessible and cheap for anyone with a smartphone. However, as with any type of investing, there is risk involved.
“Risk basically equals how much money you are willing to lose,” Ray said. “Rule of thumb, the younger you are the more risk it’s OK to take on.”
Hutzell once lost $500 from stock chasing and poor decision making. Hutzell said stock chasing, also known as market chasing, is when an investor buys a stock as its price is rising. However, stock prices also fall and if not careful, traders lose money when a once-rising stock begins to fall.
“I’ve had good days and had bad days,” Hutzell said. “Nobody is ever going to be perfect with it, but it’s all a learning experience and you get better each and every day.”
Ray said that most people who lose large amounts of money in the stock market are those who get too confident and risk more money than they can afford.
“You lost money? Leave it alone for three months,” Ray said. “You have to train yourself on not to react too quickly.”
Brittney Butler is a journalism student at the University of Georgia’s Grady College of Journalism and Mass Communication.