Isn’t it annoying how money doesn’t seem to last as long as it should? Payday is such a happy day – money comes in, but somehow doesn’t quite last as long as you want. I mean, you’re doing all you can to become financial savvy in college (including all 14 of the previous College Money Tips!), so why isn’t there any money left over?
Let me tell you two personal finance secrets, one you may have heard, and one you probably haven’t. You may have heard:
Pay Yourself First
“People” (personal finance “gurus”) say “pay yourself first!” as much as they can. What they mean is: when you think of “savings” (as in, moving your money into a savings account), you should think of it as a bill. And not just any bill – your most important and pressing bill. When you get a paycheck, your savings should be the very first bill that you pay.
This elevates you, your life, and your goals to Priority #1, above everything else that pulls at your cash. Good news, right? Well, yes, in theory. But here’s the other secret, the one most people don’t mention:
“Pay Yourself First” Doesn’t Work for Everyone
Yeah, it’s a great idea. But many people have dug themselves into such deep financial holes that “pay yourself first” is just a pipe dream. “Pay the rent/electricity/water bill first!” is a better mantra for many people.
But… here’s a bonus third secret for you: You, as a college student, are not one of those people.
“Pay Yourself First” Might Actually Work for You
You’ve got fewer bills, and your biggest bills are likely to come only once per term: tuition, room and board. Right now, before you have bills tugging at your money from all directions, you have a better shot of putting away a little money from every paycheck.
So give it a try. Pay yourself first. Pick a percentage – 10% is good, but so is 20% or 5%. Whenever you get money – from a paycheck, birthday, or whatever – take that percentage and put it away in a savings account. You’ll be surprised at how quickly it adds up. (Remember: savings work best when you have a plan for your savings.)
If you start now, you might just be able to make “pay yourself first” work, and be able to keep it up, even as you get older and those “real bills” start to come after you.