Happy 2017! Yes, I know I’m late to the game on wishing everyone this. I hope your January is going well so far. As part of my 2017 goals, I wanted to manage my finances better this year. I was given real financial responsibilities when I entered college. This meant having access to a bank account and debit card. Even though I felt like an adult with all this money to my name, it took a lot of trial and error to make sure I still had money to my name.
I decided to join in on Earnest’s initiative to help students plan ahead for graduation and also share some of their favorite experiences and insights from college. This gave me the opportunity to reflect on how I learned to manage my finances in college and what lessons I hope to carry on towards graduation and post-grad. The idea of writing a letter to my future self gave me a perspective on where I want to go, and what I need to do to get there.
College is a fun time to soak in all the knowledge around you. Yet, it can get expensive these days. Make sure you check out Earnest’s resource page to find out how you can choose a loan that fits your situation, refinance student loans, and much more!
Dear Future Kim,
By the time you’re reading this letter again, you’re probably packing up your belongings into boxes for your post college move–wherever that may be. All your class assignments from that first (and last) Stats class to your favorite Comm. classes are labeled and boxed. The photos on the fridge that documented your first Friendsgiving to your multiple attempts at a full roomie pictures are neatly placed in an old shoe box. I hope your succulents, Melly and Theo, survive this long to witness the move from a dorm to an apartment to last college living situation.
Graduation is near. Are you excited? Nervous? Anxious? You always thought that entering college meant being in the “real world.” Yet, now it’s real. You won’t have the cushion of classes that require you to socialize with peers. No more 10:30 pm coffee runs to build stronger bonds between friends. Those days of staying up late wondering if you’re GPA will survive will be a thing in the past. You will be entering the real real world after they hand you your diploma: a 9 to 5 job, having to fill out taxes, and remember when to get your car oil changed.
One of the biggest lessons I learned in college was not how to write a 6 page paper in 2 hours. Or how to speed read a 25 page assignment in 40 minutes. Or how to take the streetcar late at night for boba runs in the International District. Instead, it was how to manage my finances.
Don’t pat yourself on the back just yet. You didn’t really learn how to manage your finances until you move off-campus until 2 years into college. The frantic apartment hunt pushed you onto the path of financial responsibility. Your part-time paycheck was once used to pay for unnecessary Target runs, and mid-day Starbucks pick me ups. Hopefully after 4 years, you have it down to a tee how much rent, utilities, and groceries would consume your paycheck.
I heard the real world outside of college is scary. But you’ve gain a lot of knowledge and experiences in college that will help you make it out there. Just don’t forget these 5 financial lessons you learned through trial and error in college:
Check your bank account often
We all have heard stories about how scammers can clear out someone’s bank account quickly. It’s extremely important to make it a habit to check your bank account often. Look for any suspicious or unauthorized transactions. Scammers will begin their heist by withdrawing small amounts to see if you notice. If you don’t catch those and report them to your bank right away, it will only continue to grow bigger and bigger.
Start a budgeting worksheet early
I’m embarrassed to admit this, but it took me 3 years to finally start a budgeting worksheet. I spent about 2.5 hours going through 4 months worth of bank statements. It was shocking and embarrassing to see how inflated my spending has gotten over time. I didn’t realize I had spent that much on eating out and shopping. If I had started to budget earlier in my college career, all this overspending could have been regulated better.
We are lucky to live in an age where information is at our fingertips. So use it. There are hundred of budgeting worksheet available online. Many even cater to a college student’s expenses. They have a step by step guide on how to fill it out and budget your expenditures for the followings month.
Take out however much you budgeted for eating out/ entertainment expenses. Pay only in cash so you can see how much you have left right away
I can’t take credit for this tip because my older sister actually recommended this to me. After going through college herself, my sister told me to take out however much I want to spend on eating out/ entertainment in cash. If I pay only in cash, I can see right away how much money I have left for those expenses. With a debit card, it makes it so easy to swipe there. If you’re anything like me, you will be in for a surprise when you check your bank statement and find out you’ve spent that much on donuts.
Sell/ donate items you don’t need
I will admit that I am a hoarder. Every little object from my life I keep because I believe there’s some sentimental value in it. Even though many of the items have lost it’s strong value that it once had, I still can’t part with it. One of the things I’m working on this year is learning how to become a minimalist. I mean, do I really need this dress that I wore once to a high school dance and haven’t touched since then? No, Kim. You don’t.
I’m slowly cluttering and asking myself if the item I’m keeping has an active purpose in my life currently. If not, it needs to be sold or donated. By selling some of the items (such as clothes, furniture, and textbooks) it adds some extra cash into my rainy day funds.
Quality over quantity
I never quite understood what it meant to have quality over quanity. For me, I prefer my stuff to not break the bank. Therefore if it’s cheap, I’m happy. Since I came to college, I’m starting to recognize that some of my “cheap” priced items are breaking down or need to be replaced at a faster rate. I’m learning that it’s better to invest in items that you can use for a longer period of time. You’ll save your money by not having to replace the items every few months. Plus, it will still have that sentimental value that you seems to draw you into keeping stuff.
You’ve been through a lot in college. And it all has shaped you to become the strong and beautiful person you are today. Remember all the fun memories you had in college, but don’t forget the important real life lessons you learned like how to manage your finances. Wherever your post college life may take you, always remember to check your bank account often, create and stick to a budget, sell/donate items, and recognize that quality is better than quantity.
I’m proud of you,