Author Topic: In college and need mustachian money advice.  (Read 3016 times)

p3rsonalfinanc3

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In college and need mustachian money advice.
« on: December 14, 2014, 03:48:37 PM »
Hey everyone,

I'm 20, halfway through college, and worried about the future. All my friends who are graduating and clinging on to their pennies as they live paycheck to paycheck.. and the job market is looking pretty dusty out there.

I saved up a fair amount of money by working hard in high school and during the semester/summer. I've got about $11,000 saved. How do I make that money grow on its own? What are the next steps that I take?

I've already got my money in a personal savings account with capital one 360 which brings in a higher APY than it did at Bank of America. I try to save over 50% of my paychecks. I'm fortunate to have scholarships and parents who are able to pay for my college education, leaving me with no loans or debt.

Thanks!

Thegoblinchief

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Re: In college and need mustachian money advice.
« Reply #1 on: December 14, 2014, 05:05:42 PM »
The job market varies widely by major and willingness to relocate. If you share your current major and state, you might get better advice.

Depending on what plans you have for the savings, consider investing, especially via a ROTH account for tax free growth which a much higher earnings potential over the long term than today's paltry interest rates.

Left

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Re: In college and need mustachian money advice.
« Reply #2 on: December 14, 2014, 05:39:28 PM »
I'd invest in a taxable account if you only have 11k saved up? Mostly because you might need it early in your career (relocating/supplies/clothes/etc), or as an emergency fund.

MDM

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Re: In college and need mustachian money advice.
« Reply #3 on: December 14, 2014, 06:12:59 PM »
I saved up a fair amount of money by working hard in high school and during the semester/summer. I've got about $11,000 saved. How do I make that money grow on its own? What are the next steps that I take?

p3rsonalfinanc3, welcome to the forums.

To me (you may get a variety of opinions) your situation screams "Roth IRA."  It appears you are paying $0 federal taxes (don't know about state), so you might as well put your money in a place where it won't ever be taxed again (yes, politicians could change that but it seems unlikely).

With the Roth, you can withdraw your contribution at any time so you aren't locking it away.  You do need "earned income" for the contribution year, and the limit is $5500/yr. 

The remaining $5500 ought to go toward paying your college expenses.  Maybe not all at once for tuition if your scholarships cover that, but you should have some "skin in the game" regarding your college living expenses.

MrsPete

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Re: In college and need mustachian money advice.
« Reply #4 on: December 15, 2014, 06:41:38 AM »
The job market varies widely by major and willingness to relocate.
Yes, my college junior daughter has already had one sincere (and unsolicited), "Come see me first after you graduate.  I really want to interview you for a job." right here in our own back yard. 


daymare

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Re: In college and need mustachian money advice.
« Reply #5 on: December 15, 2014, 10:12:05 AM »
I think you'll be just fine!  It sounds like you are a pragmatic, hard-working individual who understands how to delay gratification.  My practical advice would be to make sure you get internships over the summers (or research positions if you're looking to go for a PhD).  Remember that looking for a job is basically the culmination of your work during school - if you have consistently worked hard, put in hours, gotten good grades, gotten to know your professors, polished your resume, etc, you will have an easier time finding a job.  The biggest thing is having work experience, ideally something part-time during the school year (tutoring for $, or leadership positions in clubs, volunteering) plus internships over the summer.  (To give some context, I graduated in 2011 and accepted a job offer in October of my senior year after months of intense application work that started as soon as the school year started, though of course all my work in college before that was the real base of the effort.)

Then just approach the job search with the same level of effort you have put into school - use all the resources at your disposal.  I practically lived in the career services center - not really, but I did meet with them several times about my resume, to get advice for the job search, to do mock interviews, and then later to discuss my offers.  At my school, there was a repository of all the job postings (through which employers would look over resumes and pick people to interview on campus).  Use your internships to figure out what kind of job you want (or don't want - finding that out is important too), then apply to every job you would reasonably consider.  So, don't apply if it's in a location you would never live in, but do apply even if it's not the perfect fit.  You never know how the job will actual differ from the appearance in the description, you may surprise yourself by what job you end up wanting to take, plus getting practice applying and interviewing is useful.

Apply to everything, especially to the posting that are a little bit inconvenient and require cover letters - if that annoyance stops others from applying, better odds for you.  Plus sending lots of applications makes it easier to apply to jobs in the future - you get better (and faster) at it, less intimidated by requests for cover letters, etc.  You will then probably reap the rewards with many interviews.  Just approach the whole process with the desire to learn as much as possible - understanding how to apply for jobs, what employers want, how to frame and articulate your activities and goals, how employers find employees, how to write a resume, how the whole system is set up - this is all interesting.  You will be better off for knowing it.  And every interview you get, every company you research in advance of said interview, every person who interviews you - that's an opportunity to learn something.  Knowing more is a good thing, makes you a better and more interesting person.

My personal philosophy is that I always want to be surrounded by intelligent (and intellectual and interesting) people, and that I want to learn everything, and there is something to learn from most situations/people/books/experiences.  And that is an attitude that lots of employers want, when coupled with hard work.

Quote
The remaining $5,500 ought to go toward paying your college expenses.  Maybe not all at once for tuition if your scholarships cover that, but you should have some "skin in the game" regarding your college living expenses.


Totally disagree.  The poster's parents are able and willing to pay for college - one doesn't need to have skin in the game (financially) to be a responsible student.  I didn't pay a penny for college expenses and I worked very hard throughout - don't imagine my behavior would have changed if I had to pay for it.  I would also recommend the Roth option - you have until April 15 to contribute for 2014 ($5,500) is the max.  Bernstein's 'Preparing for prosperity, armageddon, and everything in between' is one of my favorite books on investing - it is very clear and big-picture.  I would suggest reading that, other books, checking out blogs.  If I were you, I would put in 1K/month starting this month, and ending with 1.5K in April.  Invest it with Vanguard into a stock index fund or far-off target date fund.  You can expand your asset allocation as you add more $ to your Roth - I have about 5 funds in my Roth, very happy with that.

Future Lazy

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Re: In college and need mustachian money advice.
« Reply #6 on: December 15, 2014, 11:33:02 AM »
I'd invest in a taxable account if you only have 11k saved up? Mostly because you might need it early in your career (relocating/supplies/clothes/etc), or as an emergency fund.

+1, this is what I've done with my savings so far. I used VBINX for my emergency fund/house downpayment savings. This way I can easily access it as my life changes and I get older and more 'settled down'.

Just some job advice from someone who didn't go to college, but has friends who did (for good and bad degrees, in this job market): Be willing to take work outside of your 'field', in other types of work you're interested in. Even if your degree is in Business Management, not working looks way way worse than working outside of your field. The job market is NOT horrible, like people think it is, and it's possible to find a good job in under 3 weeks (in my city), even without a degree.  My husband just did it.

Good luck, and great start by the way! :)

GizmoTX

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Re: In college and need mustachian money advice.
« Reply #7 on: December 15, 2014, 01:30:17 PM »
My practical advice would be to make sure you get internships over the summers (or research positions if you're looking to go for a PhD).  Remember that looking for a job is basically the culmination of your work during school - if you have consistently worked hard, put in hours, gotten good grades, gotten to know your professors, polished your resume, etc, you will have an easier time finding a job.  The biggest thing is having work experience, ideally something part-time during the school year (tutoring for $, or leadership positions in clubs, volunteering) plus internships over the summer. 
+1

You should be applying for a summer internship NOW, as many companies make their decisions many months in advance. DS is a junior in engineering, & his college has much evidence that internships are as important as a good GPA for employment offers following graduation.

Suggest you open a Roth IRA, fully fund it with $5,500 for 2014, & do it again in 2015 (after you've earned it). Since this is long term money that will compound tax free, invest it in a total stock market index fund, such as Vanguard or Schwab. In the event of an extreme emergency, a Roth IRA will allow you to withdraw your contributions without penalty, but you really want to avoid this because you won't be able to re-contribute whatever you withdraw.

Put your emergency amount or the balance of your money in a savings account with an online bank that offers a higher APR, such as Synchrony. You want zero fees, little to no minimum balance, free transfers to/from your checking account, & FDIC coverage. While a savings account doesn't have the potential to earn as much as a stock fund, you won't have the risk of losing any principal. Invest any remaining funds in a tax advantaged no-load fund with very low fees.