In this modern world where everyone is a self-professed financial adviser with millions of books out there drilling the idea that saving and being thrifty is theonly way to financial success, I am here to propose a new way of thinking. I’m here to turn the tables and pose a revolutionary idea to college students: Spend more money now, and save later!
Why this sudden change of heart? It comes down to the simple economic theory of earnings potential. Milton Friedman put it best when he said, “You are never going to be poorer than you are today.” This is especially true for the majority of college students in school today with either no job or a low-paying part time job.
Just think: no matter what happens, you will be making more money in the future than you are now. So, it is in your best interest to borrow money when you need to, enjoy those priceless moments, and stop eating Ramen noodles every night.
Besides, why is it that we feel the need to save every penny? To increase our savings? That in itself is counter-intuitive for those with student loans. Is it because we fear we might not get a job out of college? This mindset is extremely defeating and discouraging. If all through college you fear you won’t land a job just because “everyone else” says you won’t, then you are bound to be unemployed! It is hard to argue against any point solely based off of what we think is happening to everyone else.
I’m not advocating that all students go out and max out their credit cards, spend recklessly or generally be fiscally irresponsible. In fact, those of you who are avid readers of my column know that I encourage students to be mindful of their spending. I just wish more students would stop stressing to save every last penny while sacrificing college memories that they will never get to experience again.
Take spring break for example. Spring break is a staple in the student’s collegiate experience. In one week, you’ll have gained priceless stories and memories that you’ll have to tell for years to come. But many students will miss out on this. Not because they can’t afford to take advantage of Spring Break but because they think they can’t afford to.
There are several ways to affordably enjoy Spring Break. How about a road trip with friends to Orlando? With just four people you’re splitting gas, food, and several other expenses up four ways. Want to go a little further than the next state over? Check out websites like studentcity.com which not only allows students to sign up for trips but you’ll get discounts on air fair, coupons on food, and group discounts.
So, be smart about your money, but do not feel the need to fit the “poor student” college stereotype just because you are afraid of spending money.
Think from a logical perspective. Say you spend all of your time saving money, not going out to events, extreme couponing or the multitude of activities people do to be frugal. If you really work at it, you might save $1,000-2,000 per year. That sounds like a good bit, but at what cost? The hours spent driving around looking for the best deal, or maybe the time spent bored not going out with friends.
Now think about when you land your first well-paying job around age 25 or 30, making $45,327 per year. I took the $45,327 from NACE’s (National Association of Colleges and Employers) yearly salary survey for recently graduated seniors. For those not in NACE’s ‘average salary’, you will still be making more money after college than you are nowThat $1,000-2,000 you spent your whole year saving back in college is made up in a matter of weeks at your new job.
It’s as if you went through unnecessary hardship for no reason in college all because of a vague fear of not making more money in the future. Unless, of course, you make an honest effort and go out of your way to not have a full time job.
Again, the point must be stressed. Live your life now and don’t torture yourself to save pennies in comparison to what your future earnings will be. Again, I encourage you to be conscious of your spending and make an effort to save money when you can but reward your efforts. Saving all those pennies for a rainy day that may never come may end up causing you to miss out on many sunny days.
Edited on November 14, 2013
