Essential Financial Lessons for 18-Year-Old College Students

As an 18-year-old student planning your academic journey, it's crucial to lay the right financial foundation. Here are some essential lessons to consider, backed by expert advice and personal experiences.

Consult Financial Advisors Before Taking Out Loans

Before committing to student loans, it's important to consult with financial advisors. The expenses associated with college can be substantial, and student loans could have serious long-term implications. It's not a decision to make lightly. Here are a few methods to grow your savings through investments, but be cautious and do your research.

There are several companies that offer financial advice on the radio. Listening to their insights can provide valuable information and help you make informed decisions. Consider speaking with a financial advisor to understand the benefits and risks of your options.

The Dangers of High-Interest Student Loans

While many people are encouraged to pursue higher education, the reality can be much different once you step out into the workforce. College degrees in subjects like chemistry and physics may not always lead to the high salaries promised by academic advisors.

Upon graduation, many find themselves struggling to find employment that pays a livable wage. Even then, the jobs that are available may not justify the heavy debt load accumulated during college. Personal anecdotes suggest that the value of college degrees has been overestimated, and in many cases, the return on investment (ROI) is not as promising as initially thought.

One example highlights the challenges faced after obtaining a PhD. Despite a great economy, the post-pandemic landscape has led to a 14/hr wage, which is baffling given the significant investment made in education. In other words, the high debt accumulated during college may not be worth the investment, especially in a poor job market.

Invest Smartly: The 20-30-50 Rule

Luckily, there are strategies to navigate the financial landscape more effectively. One such strategy is the 20-30-50 rule, which emphasizes responsible spending and saving. This rule suggests allocating your income as follows:

50% of your income to your needs (e.g., housing, utilities, groceries) 20% to your wants (e.g., entertainment, hobbies, travel) 30% to investments

Using this rule can significantly improve your financial health and future prospects. For instance, consider investing in a debit card app designed for teens, such as Akudo, which provides free financial videos to help you better understand and manage your finances.

Investing Through Technology

With the rise of digital financial tools, there are more options than ever to start investing. Apps like Akudo offer a debit card and educational resources, making it easier for teens to learn about financial management. These tools can be particularly useful for those new to the world of investments.

If you have a sibling under the age of 18, encourage them to explore Akudo and its resources. By starting young, you can build a solid financial foundation and set yourself up for success in the future.

As you navigate the complex world of finances, remember that knowledge is power. Stay informed, plan wisely, and make decisions that align with your long-term goals.