Can someone give me some good financial advice?
I am 18 years old, and realized that I will be in some major debt when I graduate from my prospective college. I guess I let me desire to attend the school outweigh the costs, which is about 49,000 dollars a year, with about 19,000 of that total I will have to pay in student loans a year. Can someone give me some advice about saving money? I thought about investing but how can I when I have no money to hire a broker…I mean I heard of investing in good mutual funds to earn money for retirement purposes, but is there something else I can do!?
spend less than you earn, and save the rest
You will find it very difficult during your college years to invest, but developing a saving habit early is a good thing.
You don’t need a broker to create an IRA account (for you, a ROTH IRA would be appropriate). However, you do need a certain amount to start saving. Vanguard http://www.vanguard.com and Fidelity http://www.fidelity.com can each help you out with getting started. You won’t have to pay any fees to open an account and you can manage it online yourself – no broker required.
If you can, start off by saving $20 a month into a saving account at ING http://www.ing.com. Once you build up sufficient money in that account, open your IRA.
It’s good to save something, even during the time you are learning and paying down your loans. Once you start work, you’ll already have that good habit.
Read the second source book below.
You are at an excellent age to begin thinking about savings. Student loans are considered good debt so don’t worry about owing a lot in student loans. My only advice about that is when receiving the student loan, don’t take out more loan than needed. For example if a year’s tuition is 5000 don’t get a loan for 10,000 to have extra dollars in your pocket. You will waste the money away, have nothing to show for it and your loan amount will add up quick making your payoff amount higher and longer. If you just put 10% of whatever you earn on any job in a savings account starting at the age of 18 you will see it will soon add up. As far as retirement, If you start a roth IRA as soon as you finish school and begin working on your career (even an entry level position), which will probably be in your early 20′s, just putting back a simple 200 a month for 20+ years you will retire wealthy.
I wish you well in the start of your adult life. Always think before acting!
Get some books on budgeting and investment from the library. With you current financial situation, you are right that you can’t afford a financial manager of broker. You may even determine that in the short run, it is better to pay more on the loans than to try to same money. Look at the difference between the interest rate on the loan and the interest rate on the savings.
Here are a couple of things I thought of:
Can you go to a cheaper 2 year college first and do an academic transfer? That way you could save some money on at least 1/2 of your college experience.
Can you do an on-campus work study job? Or can you get a part time job on campus so that you can get a discount on tuition? I guess I’d swallow my pride and work in the cafeteria if it meant I could go for $15000 a year instead of $49000…
Can you borrow some money from your parents so that you don’t have to pay interest on the other loans? I know they probably don’t have that much a year, but even if they could lend you $2-3000, it’s still less money you’d have to repay with interest.
I know you asked for advice on saving money, but I think this is a two-fold question – how can you create less debt and then save in order to pay it off. Yes – I agree with the post that talked about the savings plan with ING.
You should also consider a college savings plan that you are both the owner and beneficiary – you can pull out money any time for qualified purposes (tuition, etc – it depends on the state rules) and it’s either tax reduced or tax free… so that might be helpful.
You have plenty of options though!! Good luck in college and it’s really great that you’re asking these questions now instead of when you’re already in debt.