It’s simple: don’t buy a new car – you probably can’t afford it. You probably can’t afford that iPhone either. Many 20-somethings make a few poor decisions that put their bank accounts in the red for decades. My parents instilled a bit of frugality in me that has served me well through my mid-twenties. If your parents did not set a good financial example for you, it just might serve you well to take some notes!
Hint #1: If you can’t pay for it, don’t go there.
It is ironic to me that a business major could graduate with tens of thousands of dollars of debt. Call me crazy, but business majors should understand fundamental monetary concepts. Over-borrowing is a bad practice, even when the financed product is your education. It seems like most people consider admittance into a good, private school a license to enroll. Sorry folks, but just because you got into Columbia doesn’t mean you are entitled to go if you can’t pay for it. If you think you have experienced buyer’s remorse, just think about all those students who graduated in 2009 with negative money in their pockets and no job offers in sight. Some students are fortunate enough to have their parents foot their tuition bill. For the rest of us, cost should be a major factor in our college choice. I attended a state school, but I got a valuable degree. I financed the cost of school with scholarships and graduated without the burden of student loans. Most importantly, I had three job offers before I graduated, even without an expensive “name-brand” on my diploma. To get your money’s worth out of continued education, pursue a degree in a highly demanded field and earn decent grades. After all, college is about making more money in your lifetime, not attending the fanciest campus with the best football team.
Hint #2: Use coupons!
It’s easy! Just clip ‘em and scan ‘em! Be careful not to fall into the trap of buying a product just because you have a coupon for it. You aren’t saving money if you weren’t planning on buying it in the first place. Make sure to search for coupons that apply to products you purchase on a regular basis. Many major grocery store chains offer electronic coupons that can be loaded onto a loyalty card and the discount is automatically applied at the register. A quick Google search for coupons will return thousands of results for printable savings. Coupons might sound like an old school tactic, but why pay $3.50 for shredded cheese when you could pay $2.95 with a coupon?
Hint #3: If you can’t put half down, don’t buy it.
Credit cards add an interesting dynamic to shopping. They make it possible to “buy” things you can’t actually afford. To put it bluntly, if you can’t afford it, don’t buy it. But…if you just have to have it, it’s okay to resort to the plastic occasionally. A basic rule that I follow is that if I could pay at least half of the price right now, it’s okay to finance it. This applies to cars, coffee, movies, electronics, clothes, etc. The trick here is not to spend that half you do have and also to save up the other half before the bill comes. Credit card interest is a waste of your money so don’t carry a balance unless it is absolutely necessary (iPhones are not absolutely necessary. Sorry.) Additionally, it helps to only have one credit card, preferably with no annual fee. Annual fees are also a waste of your money.
Hint #4: Don’t spend every penny you earn.
Save money. The end.
Develop some good habits in your twenties and set yourself up for a wallet-friendly future. You, too, could be a debt-free 20-something stud.
