Although college is often labeled as “the best years of your life,” there’s no denying the financial turmoil that comes with the territory of student life. Between living day-to-day on a shoestring budget to worrying about “what-if’s” and student loans, money worries and college tend to go hand in hand.
Let’s be honest: the public at large does a pretty poor job of saving their money. Sadly, college students are no different. After all, why stress out about cash now when such problems can be pushed off to the distant future?
However, not starting sooner is almost always the biggest regret of all-star investors who are currently sitting on millions of dollars. While you may not want to even think about money as a student, the fact remains that getting involved with saving and trading now will ultimately help secure your financial future down the road.
If you don’t have much of a financial background, fear not: here are some smart saving and trading tips for college students with next to nothing in their pockets.
Do Your Homework
For starters, you’re going to learn to learn the ropes of trading before you invest a dime. Trading is often a sort of “trial by fire” where you learn the hard way just how aggressive the market can be. Yet if you don’t have much cash on hand, you obviously don’t have much to work with in terms of your trading options.
That being said, you should start learning how to invest in options today so you’ll know what to do when you have more to spend in the future. There’s little barrier to entry when it comes to becoming a trader: the more you understand the market before you get started, the better.
Since you’re already in the planning phase of your investment career, you don’t have to worry about over-analyzing the market which often paralyzes newbies who don’t understand what trading is all about.
Build Up Your Nest Egg
Perhaps most importantly, you’re going to need to start building up a nest egg today if you want to be able to play the market down the road.
That means establishing good habits such as putting that $50 birthday check from grandma into a high-interest account versus splurging on pizza and wings. The idea of putting away your disposable income may be daunting, but it certainly beats gambling with your finances when it comes time to trade. Setting aside a percentage of your income for trading not only encourages good saving habits but also gives you more options when you get started.
Adopt the Right Mindset
If you think that trading means becoming an overnight millionaire, think again.
While trading success stories are indeed enticing, it’s much more prudent for newbie traders to adopt a more grounded mindset. That is, you should study the market and take action that isn’t rooted in blind hope. Chasing quick cash often results in rash decisions that ruin your investments.
When in doubt, “better safe than sorry” should be the motto of any new trader. While any market is inherently risky, taking unnecessary chances as a trader doesn’t make sense for those starting out with little to invest in the first place.
Is trading out of the question if you’re a broke college student? Absolutely not. By understanding what it means to be a successful trader now, you can set the foundation for your future for years to come.