Tips to stretch your money while you are still in college
College days gives us the most mesmerizing memories that we cherish all through our lives. It is during that time we develop some habits which remain with us during our lifetime. Thus, it is necessary to carefully choose what we tend to do. The habits or likes and dislikes we develop in that age remain with us in the long run. Hence, one should be very careful while choosing the habits for ourselves. As one wrong step could result in taking your future to doom. From the many quirks like eating, clothing, etc., investing is also a fundamental practice which should commence at an early age so that it converts into a habit and benefits us at later stages of life. Following are some tips which would help you to develop the habit of saving your money while you are in college and then eventually convert it into investments.
The 60-40 rule of youth
Youngsters have two different ways through which they are able to earn. One is by way of pocket money which they get from their parents and the second is the part time job they take up during their studies. Whatever may be the source, they have some sort of income which is required to be spent and saved (rather invested) in order to make the most out of their income. The young generation generally follow a 60:40 rule for spending their income. The 60% of their income is dedicated towards spending at places which are mandatory. But, the remaining 40% is dumped into things which they neither require nor they have to buy. So, the students have to understand the need to save the money which they otherwise put into the drain. This 40% of their income can be invested in various mutual fund schemes as per their investment needs.
Don’t take many loans or load your credit cards
Many times in the college we face a situation where we have a scarcity of funds and we tend to take loans from our friends. If those loans mount up then it becomes difficult for us to pay back the loans. With the growing advantages of banking and finance sector all the youngsters now have access to credit cards which they generally use to overuse in buying things which are not literally required. This practice once started is carried on for an entire life span. It can make a vicious loop at later stages which will result in financially handicapping the clients. So, at an early stage the students must start avoiding the habit of spending beyond limit and restrict the loans until they are inevitable. And instead of aspiring to spend more they must have the desire to invest in mutual fund schemes like liquid funds or debt funds etc.
Don’t be extravagant
Spending for what you like and you need is a must. But, when you start requiring beyond the limit and luxuries become your necessities then it might become difficult for you to save for your future. This can be termed as spending lavishly. Especially when we are in college there are all kind of people studying with us. Some are quite rich and are able to afford things which may be a luxury item for anybody else. But, youngsters are unable to understand that and they also desire for the same. It would definitely be an extra spending for them and so they have to understand that instead of spending that money they can utilize it to make more money form it. That money can go into mutual funds through SIP investing. Once you start spending beyond your limit you carry on that even when you do not have enough money. It can cause financial issues and let you hold back from spending even for the necessities.
Benefit from the bulk shopping
There are occasions where the selling joints host various discount campaigns. Also, there are many places which allows you a certain amount of discount which allows you to save money. The customers generally have to be simply aware of the times and places which allow such discounts and offers. The money thus saved can be used for investing in mutual fund plans and let their money grow for them since an early age. This growth of money will benefit them form in the later stage as it can fund many of the initial expenses that a person has to bear while commencing job.
Inculcate the habit of investing at an early age
Small savings of the college students can be easily converted into investing. As kids our parents buy us a piggy bank and motivate us to save money. In the same way initiating mutual fund investment at an early age would result in making a long investing schedule. Starting the investment process by investing in liquid funds would give you the freedom of withdrawing your money at any point of time and also will allow you to understand the working of mutual funds. So, initiate the investment and make the best possible use of your money and develop a habit of investing.
Therefore, inseminating the culture of cutting down on your extravagant expenses and deploying them into mutual fund schemes will help you to build a corpus for the long-term. So, be a smart investor and initiate your investment process as a college student and work wonders with your money.
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