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Spending

 

By Stacey Bristol
Daily Nebraskan, U. Nebraska

(UWire)—"You might be a college student if...caffeine has replaced vegetables in the four food groups...if most people are waking up when you go to sleep...if you can nap during the time it takes a professor to take a breath...and if you spend more money on books than on clothes, food and shelter combined."

If one thing's true, it's that college students don't live a fabulous lifestyle. Balanced meals and sleep are always in short supply, but it's a lack of money that really defines college life.

The thing is, if a student does happen to come across an extra $10, it's sure to be spent. And it's not always spent on the smartest things. No, I'm not trying to say money should only go toward things that students need, but some purchases just make less sense than others. Lattes, parking tickets, have-to-have new shoes to go with must-have new clothes and brand new textbooks are all things we don't have to spend money on. But we still do.

The smartest thing would be to save or invest our money. But spending money is much more fun than saving. I know this.

I'm a girl who loves to buy new things and participate in a little retail therapy. I've even enjoyed a latte or two of my own if I have extra cash.

Lattes, parking tickets, new shoes, and brand new textbooks are all things we don't have to spend money on. Until recently, I didn't think too much about these occasional purchases. What really changed my mind about them was a recent workshop. The workshop, called "Think Like a Millionaire," showed all the ways millionaires save money. One was cutting back on the little things we spend money on now, in order to save for later. For many students, this is quite an unfamiliar idea.

Here's an example. Say that Sarah Student buys a latte every morning on her way to class. With a tip to the barista, this is about $4, totaling $20 each week of the school year. We'll say this is $80 a month for nine months of the year.

This $720 doesn't seem like the craziest amount, especially considering caffeine is the only thing getting her through those morning classes. But what if she'd saved this money instead?

If Sarah had saved it each year and had it compounded annually at 8%, she could have saved more than $3,000 at the end of four years. Then, if she saved that amount for another 30 years without adding anything, she would have more than $32,000 at the end. This is how you think like a millionaire. You weigh the costs between now and the future. Should she pay the $4 every morning? Or should she focus on the $32,000 that she could have down the road?

Who would have thought a latte could be so expensive?

This is one way for a college student to save. Getting rid of costly habits is always a smart thing to do. But besides this, it's really all about thinking about our purchases.

Parking tickets are something else I don't understand. It takes less than a dollar to park at a meter on campus for over an hour. So why not pay? A dollar is much cheaper than that parking ticket you'll surely get if you don't. Plus, think how many hours of parking the change from that parking ticket would get you. And if you keep your spare quarters in a jar, you'll never not have the change when you really need it.

Getting rid of costly habits is always a smart thing to do. The next thing I see students spending their money on, for no reason at all, is new textbooks. Each semester, there's always that exciting moment when you find out just how many textbooks you'll need—and how much they cost. I'll never understand how a textbook can cost more than $200, but they do. So why buy it new?

Unless you really love the sound a new textbook makes when you first open it and the feel of shiny plastic wrap, you should buy used. I've saved more than $500 each semester that I've done this, and besides the occasional highlighter marks, which sometimes come in handy, I can't even tell the difference.

Now imagine that I'd saved this $1,000 each year for four years at 8%, compounded annually (just like Sarah Student). This totals more than $4,500. And if the $4,500 is saved once for 30 years in the same way, I'll have $45,000.

That's a lot of textbooks and lattes—or a great new car. No matter what, I think I'd rather have that amount of money in the future than the brand new textbooks now.

So, I might be a college student if...I stay up way too late...if I drink way too much caffeine...and if I'd rather keep living this lifestyle, save and live like a millionaire later.

Published January 16, 2012

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