Even college students can afford to build their portfolios.
Finding extra investment money in college is not like struggling through advanced calculus or organic chemistry. It is nowhere near as difficult as perfecting your Spanish, nor is it as painful as studying for finals. An investing-friendly lifestyle could be compared to a class like Popular Music 101–not all that difficult, but you still have to show up. If you can master the art of deciphering Phish lyrics, then investing shouldn’t pose much of a challenge.
Learning to invest, and saving the money to do so, is simple when you follow a few basic guidelines and alter the way you think about money. Many college students have empty pockets because they spend their money too easily. It’s convenient to drop change into the snack vending machines and order pizza three times a week when you are busy. Awareness of one’s spending habits and the desire to build personal wealth are good virtues to develop. Compared with the daunting task of exercising away all of those extra pounds, it’s downright simple.
Just remember: The future is as important as the present. It never hurts to change the way you spend, to make your money work for you. Seriously, once you clear the difficult hurdles of deciding to invest and changing bad habits, making future money is easy.
Why Start Investing?
For one thing, it’s about time. Think of time as your best friend when it comes to investing. Relatively small investments begun at a young age can grow to sizable amounts over the years. Do not make the mistake of assuming that, because you are in college, you lack the capital to invest. You can spend that extra twenty bucks on your future–or contribute to the ever-popular student charity, CHUMP (Collegians Help Undeserving Malls Profit). The new Pearl Jam Live DVD may mean the world to you now, but investments will mean the moon and stars 40 years from now.
Material items may come and go, but you will never again have the advantage of investing in your early twenties. What are you waiting for?
You’re Never Too Broke
First of all, if you think you’re broke, find out why. Where are you spending your money? Nobody wants to make a budget (I can hear you groaning), but it may be the best way to figure out where your money is going. Living on an investment-friendly track does not have to mean you eat macaroni and cheese or ramen noodles for the next four years. Just choose what you spend your money on wisely, buy quality over quantity, and pay attention to how much.
Since many of you consider ‘budget’ to be a four-letter word, there is an alternative: frugal indulgence. This is the philosophical antidote to budget woes, a bit of well-deserved respite for the financially challenged.
The ‘frugal indulgent’ is a creature of both poverty and taste. Frugal indulgents embrace and adopt the concept of shabby chic living. The frugal indulgent knows where the money goes, spends it wisely, and yet still seems to live the high life. Non-frugal indulgents are none the wiser, because frugals exude an aura of class and cash. Adopting the FI lifestyle is the best way to invest while getting that ever-so-important education.
The Frugal Indulgence Credo
- We use the money we save by steering clear of vending machines and snack counters, only to treat ourselves to a fabulous dinner out once a week.
- We quietly nurse one or two top-shelf drinks while our friends drop dollar after dollar on cheap hooch.
- We own four good, dry-clean-only sweaters, but our friends own twice as many with pulls, stains, and tears.
- We buy fresh ingredients and have learned how to cook. We wouldn’t be caught dead with high-priced, pre-packaged grub.
- We hang out in bookstores and spend a dollar on coffee, rather than spend all day at the mall. Our extra knowledge and intellectual savvy helps out on dates.
- We invest $20 to $50 every week, just for the thrill of watching our fortune grow.
Quite simply, frugal indulgents save their money by resisting smaller temptations (snack machines, pizza, CDs) and instead treat themselves to bigger and better things on occasion. Frugal indulgents sacrifice now to live large later. While other students complain about being broke as they munch on a family-size bag of Doritos and swig a six-pack of Schlitz, you’ll be smiling as you fondle your financial statement. You seem to have more moolah, you’ve improved the quality of your life, and you’re actively building your future.
Get good advice. Now that you decided you want to invest, and you have a handle on living as a frugal indulgent, you should elicit as much advice as you can from those who are qualified to give it. Ask good questions, bad questions, and dumb questions; then ask even more. A financially astute relative or trusted teacher may be a good contact for your investing queries. They can assist you as you sort out the differences between mutual funds, stocks, bonds, CDs (the other kind, of course), futures, IRAs, etc. You can also contact your college business or economics department. The faculty should be able to point you in the right direction and get you started. Still looking for ways to fulfill those pesky elective requirements? Take an economics or personal finance class.
What about the Web? Keep in mind: For every online financial site that offers great advice for the beginning investor, there is one that is laden with myths and scams. It certainly doesn’t hurt to surf the Net for information and fun, just be cautious of any advice you pick up. Discuss what you find with a trusted investing mentor.
Finally, remember to have fun. You’ll be surprised how much fun investing can be if you just give it a try. You’ll wonder why you didn’t start sooner!