Setting financial goals is an easy way to manage money. When you have a clear picture of what you want — as well as a map on how to get there — you can achieve your target.
As a college student, money can be tight, especially when loan payments start kicking in. With more than 44 million student borrowers in the U.S. who owe a total of $1.5 trillion, it’s more important than ever to learn how to budget money and spend responsibly. It all starts with outlining specific financial goals you want to reach.
1. Pay Off Debt
If you have debt — whether it be student loans, credit cards, car payments, etc. — plan a strategy to pay it off. Having debt lingering over your head can cause unnecessary anxiety. Even if you’re still in college, getting a jumpstart on loan payments could mean more wiggle room once you graduate and begin searching for a job.
Finding a job could take time, especially if it’s one that will help you achieve your career aspirations. If you put more effort into your goals now, you’ll have better chances of success later.
2. Save a Down Payment
Renting an apartment comes with the flexibility to move around often and avoid fees associated with owning a home, like repairs and property taxes. But living in a shared space can have its drawbacks. A house offers privacy to allow space away from noisy neighbors.
Plus you have the freedom to paint rooms any color you choose and do your own landscaping. Plan out your post-college living situation now by saving for a home. Most millennials save 10 to 19 percent of a home’s total cost as a down payment, rather than the traditional 20 percent, making it easier to budget for future goals.
3. Create an Emergency Fund
Unexpected problems can arise at any time. Unfortunately, most problems require money to solve. If you’re out of a job or your car broke down, it’s essential to have funds to cover your needs.
Finding a new job — especially a good job — can take several weeks, and car repairs can easily reach more than $1,000.
Create an emergency fund with enough money for three to six months of expenses. This money will allow you to solve issues without facing a dire situation, like having to borrow to pay rent or going without essentials.
4. Plan a Long-Distance Move
You need to think about your career, even when you’re still in college. What do you want to do and where is the best place to do it? As a journalist, you might want to head to New York City or Washington, D.C.
A budding actor might head west to Los Angeles. Save now for a long-distance move to get a jumpstart on your career once you graduate.
Keep in mind that a long-distance move can cost a lot of money and should be planned far in advance. It’s best to complete internships while still in school to gain real-world experience and discover options for where to go in the future.
5. Get a Retirement Plan
When you think of the best financial goals for college students, a retirement plan probably doesn’t come to mind. But you can earn more money in interest when you start saving sooner. Say you begin saving for retirement while still in college at the age of 19.
Each year for ten years, you put $3,000 in your retirement account with a 7 percent annual return. By the time you turn 29, you no longer have to put any money into that account.
Then, when you turn 59, that account will have accrued a total of $338,000. That’s a substantial amount of money that could allow you to retire earlier than most.
Financial goals make it easy to save money for significant expenses — whether it be paying off student loans, moving for your career, buying a house or retiring early. When you know what you want to achieve and how much it will cost, you can plan a strategy on how to save with a specific deadline.
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