College may seem like the last place to try to start saving, but it is the ideal time. All it takes is for a 25-year-old to put away about RM100 a month to accumulate a substantial sum by the time they reach their fifties.
Building wealth is a long-term project, and the sooner you start the better. Factors such as the rate of saving and whether the money was invested or saved will determine the total figure at the end of each term.
But creating wealth is about more than just saving RM100 a month, a change of mindset needs to take place.
Three simple steps will help students make the critical decisions that are essential for wealth creation.
1. Think long term
Whether you decide to put away a lump sum very term or make a monthly commitment, you need to have a long-term focus.
Money saved over longer periods of time enjoys the compounding effect of interest and it also outlives market fluctuations.
This means that funds that have been invested and are subject to changes in the market have a better chance of recuperating over the long term.
It also allows the funds to recover from any initial fees and commissions levied on the account. But they need to make sense as well.
Students must keep an eye on their savings and investments and seek professional help to ensure everything remains on track.
2. Be the bargain hunter
This may not be a flattering title but when you are flush with cash after college while your friends are paying off student loans, it will make sense.
A few practical tips to save money during your college years include renting school books and becoming a coupon king or queen.
Every ringgit matters and at the end of the month, it could result in additional savings.
3. Separate needs from wants
The quickest way students fall into debt is using the funds they need for the things they want.
College is expensive and many parents cannot afford all the expenses, which means the student will have to help out.
A part-time job or side hustle is a great way to bring in some cash and you will be able to maintain your savings.
Students who prioritise their savings and then their purchases are less inclined to overspend.
College is expensive even with bursaries and scholarships, but knowing where to cut the costs makes a difference.
There are many opportunities to make some extra money and work is often readily available to students. Creating wealth at a college level is not just advisable, it is essential.
This article first appeared in The New Savvy
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