As a child during the Great Recession of 2008, I vaguely remember the severity of the market crash. All I knew was that most people didn't see the crash coming and didn’t understand the underlying complex financial reasons.
This is the case with many of my college-age peers. The crash and recovery happened before we had even had taken our first high school class. School didn't teach me or my peers about the crash and its causes, or really any financial skills. That was left up to us. Now, as a college student, I witness the disparity of financial understanding among my peers every day.
To shine a little light on the subject, I asked Ederick Lokpez, director of engagement strategies at U.S. Bank, some questions.
With immense college loan debt and low-paying entry level jobs, what are some tips for college students to budget for life expenses and still repay their debts post-graduation?
Lokpez: The key is to budget. In a survey we conducted last year, 60 percent of college students said they were concerned about their day-to-day spending, but only 30 percent had created a budget to manage their finances. Acting on our personal finances is not always comfortable nor easy. Having a good understanding of your income and expenses allows you to be prepared for the future and ready to confront unforeseen expenses.
A friend of mine is a recent college graduate who just accepted a job in a city with a high cost of living. Beyond his student loan debt, he says he needs to rent an apartment and buy a car. Oh and he wants to propose to his girlfriend. How can he (and others in his position) afford all of these new expenses and still have money left for a social life?
Similar answer to the previous question. Budgeting, budgeting, budgeting! Budgeting allows you to prioritize your expenses and to save for those big purchases.
When I was in high school, my grandfather took me to meet with a financial advisor to talk about 401(k)s and saving for my retirement. At the time the advice went in one ear and out the other. While retirement may still seem like a lifetime away, how important is it for college graduates to begin thinking and planning for retirement or long-term savings?
You are not the only student/recent grad to think this way. Most young adults see retirement as a distant time. What most don’t know is that the cost of retirement can be high and that if you start young it will be an easier and simpler journey. Many people who don't start saving early enough, struggle to save when they get older, as they need to put away a larger amount of money to meet their retirement goals. My recommendation is to start saving early. It doesn’t matter if it is just a few dollars here and there. Every little bit helps.
Josh VanKooten is a summer intern with U.S. Bank's community development team.