Can students manage money?Where should I start? Do you guys have any suggestion?

[Fire enthusiast]

I want to save money so I can invest, but my salary from my part-time job barely covers my expenses. If I spend too much time on my part-time job, I'm worried it will affect my studies. I have friends who started managing their money by investing while they were students and I want to try it too but I don't know how to start or if it's a good option for me. Should I try and work more so I can actually save some money? Also, how much money do I need to save before I can start investing?

[YttriumNitrate]

It's good to start investing, but don't worry about the amount right now. The main goal is to just gain some experience. For example, it's one thing to discuss the possibility of half your savings evaporating in a market drop, but it's another thing entirely to actually go through it.

[Metalcat]

You can start investing with $1.

At this point, the benefit of investing would be to learn how to do it, how the markets behave, how you react to those behaviours.

Don't worry too much about how much you invest right now, just get into the habit of putting a bit of money into investments regularly and see how it all works. You will be way ahead of the game by the time you graduate and actually have an income to save for retirement.

Should you work more to invest now?

Well that depends. What else could you use that time and energy for? Would focusing more on your schoolwork benefit your future career more or would saving a very modest amount of money?

The bigger question is actually what else you could be doing to help your future career? School is great for learning shit, but it's other major value is in networking. Are you taking advantage of your unfettered access to industry professionals who are paid to engage with you?

Once you leave school you will never again be surrounded by people who are infinitely more accomplished than you are whose job it is to help people like you.

A few extra shifts to save a few thousand isn't going to make or break your future, but effective use of the powerful network you currently have access to definitely can.

[clarkfan1979]

I want to save money so I can invest, but my salary from my part-time job barely covers my expenses. If I spend too much time on my part-time job, I'm worried it will affect my studies. I have friends who started managing their money by investing while they were students and I want to try it too but I don't know how to start or if it's a good option for me. Should I try and work more so I can actually save some money? Also, how much money do I need to save before I can start investing?

I waited tables in college and each shift was around 5 hours. I worked 3 shifts/week during the semester and 5 shifts/week during the summer months. Looking back, I could have easily worked more during the summer months, but I am glad that I didn't work more during the semester. The balance was good for me and didn't interfere with my studies. The restaurant didn't really allow people to work double shifts because they had to pay overtime wages if you went over 8 hours/day.

I agree with the other comments that getting started and getting practice with savings/investing is more important than the total amount. If you need to work more during the summer months to get "extra" to start saving/investing, then work more during the summer. I wouldn't work more during the semester because it could interfere with your studies and/or cause unnecessary distress.

[Dee_the_third]

Like others have said, it’s good practice to save and invest- you could just open a high yield savings account, sock away a little bit and practice not touching it.

However, I would say the most important thing for you is to spend your mental energy setting yourself up for financial and professional success ASAP after graduating. Take internships as much as possible- the biggest mistake students make is to throw themselves into school and have no energy left for getting some professional and networking experience, and are starting from zero when they go to find a full time job. My school did a co-op program where you could do fall internships- these were much easier to get than summer internships, and imo are actually much more valuable because you get a full semester of work experience. Plus it’s a huge eye opener for most when you get your first professional-ish paycheck when you’ve spent years grubbing at service-type jobs for close to minimum wage.

[Financial.Velociraptor]

Recommend finding a brokerage that allows fractional shares and just doing a couple dollars a week to get experience.  Your more important point of investing right now is investing in YOURSELF.  Your studies matter.  Finishing on time or early especially with lower (or NO!) debt is also a form of investing.  Every dollar you save on loan interest is a form of investment yield and it is a guaranteed return defined by your interest rate.  Sequence of return risk on paying off debt is NONE.

If you have the discipline, I borrowed in college even though I didn't need it b/c the interest rate was zero while I was still a student and just put the money in a bank CD.  Paid off the loan in full just before I graduated and pocketed the interest!  It was only a few hundred dollars but that was a lot of money for me back then and it was risk free.

So,

1) Invest in YOURSELF
2) Develop your frugality muscles
3) Develop good habits

Once you are a couple years out of Uni, you'll be saving 20% or more of gross and making great progress.  85% of all raises at work should be saved and the rest allocated to covering inflation and growing your emergency fund.  You'll want a full year (or more!) of expenses in cash or equivalent when you are ready to pull the RE trigger.

[Fire enthusiast]

Thank you guys so much for your advice! I think I'll try to invest then, although right now I don't quite have an idea of where to invest or how to start. Losses from bad investment decisions sound kind of scary to me. How did you begin investing? Did you earn anything? What did you invest in?

[Metalcat]

Thank you guys so much for your advice! I think I'll try to invest then, although right now I don't quite have an idea of where to invest or how to start. Losses from bad investment decisions sound kind of scary to me. How did you begin investing? Did you earn anything? What did you invest in?

Have you read anything about index funds?

The MMM blog has a lot of useful information, but we usually direct people to JL Collins Simple Path to Wealth, which is a book, but everything in the book is available on his blog.

https://jlcollinsnh.com/

There's a TON to learn about investing and taxes, both of which you need to understand to make optimal decisions, but understanding the basics of index funds is the best place to start.

[Freedomin5]

A few readings to get you started.

JLCollins’ Financial Independence Checklist for College Graduates (My path for my kid — the first 10 years)

JLCollins’ Stock Series

Books that will help you on your journey (can be found at your local library):
- Your Money or Your Life
- Designing your Life

They’re not specifically about investing, but they’re really good for people just starting out on their journey.

[Kwill]

Are you in the US? If so, I might suggest a CD as a first step, instead of stocks. I was in grad school a long time. I saved via CDs, transferring a small amount each month for 3 months to 1 year, depending on the deal. $25 per month for a year would be $300 plus whatever interest -- not much but more than nothing and useful as a sort of emergency fund. My credit union often offered special deals with high interest for small accounts with regular deposits, like this.

At the end of the period, I would have a larger amount that I could invest or use or roll over into another CD. The advantage is that the money was insured the same way as a bank account but with more interest, and I could get the money back at any time by forfeiting the interest.

[Sandi_k]

This is my favorite "newbie" source:

https://www.etf.com/docs/IfYouCan.pdf

It's only 14 pages, and summarizes the Simple Path to Wealth mindset really well. Focus on what you can control:

- Your savings rate.

-  Conquer your fear of investing; bank accounts and CDs will not grow enough. You MUST invest.

- Keep expenses low, through a low cost brokerage firm, and investing in Index funds and ETFs.

- Automate. If you can afford even $50 per month, set up an auto-draw to Fidelity.

- If you are currently working, start a Roth IRA. ALL the earnings are tax-free, so it's a great place to stash your small automated contribution amount. But you can only use this type of IRA account if you have earned income: typically W-2 or 1099 work.

- Don't let perfect be the enemy of the good. Invest in an Index fund or ETF with low expenses now - such as VTI or VTSAX (Vanguard Investments) or FSKAX (Fidelity). If that's too much, choose a Target Date fund with low expenses, such as the Fidelity Flex Freedom Blend 2060 Fund (ticker symbol FWSLX). But get started.

Welcome to the mindset!

[Turtle]

If you don't already have one, opening and adding to a Roth IRA while your income amount is low would be worth looking into.  Your future self will thank you.

[Michael in ABQ]

I had some money saved from a deployment overseas my sophomore year of college. When I came back to school in 2005 I invested that along with some money from student loans (college was basically free after that deployment since I was independent for FAFSA purposes and got grants + tuition assistance from the Army). I mostly invested in financial stocks as they were doing very well at the time and I liked getting 7-8% dividend yields on some of them.

The the recession came along and my $15k portfolio dropped to about $5k.

I also blew $6,500 on some investments in local small businesses that my roommates had started or were invested in, plus another $1,000 "trading" (gambling) on Forex.


I learned a valuable lesson about trying to pick individual stocks and being over weighted in one sector. Same with trying alternative investments where I had no idea what I was doing and did little or no due dilligence.

[moof]

I want to save money so I can invest, but my salary from my part-time job barely covers my expenses. If I spend too much time on my part-time job, I'm worried it will affect my studies. I have friends who started managing their money by investing while they were students and I want to try it too but I don't know how to start or if it's a good option for me. Should I try and work more so I can actually save some money? Also, how much money do I need to save before I can start investing?

Job #1 is studies, you are investing in yourself and your future.
The sooner you live through a market drop, the better.  You will learn how you react when the stakes are pretty low.  I was perhaps lucky (?) to live through the 2000'ish dotcom bust when I have only been working a few years and had pretty low balances.  I held fast, questioned myself a lot, but ultimately didn't do any panic selling or other stupidity.  Knowing how I would react gave me better confidence in the 2008 housing crash, and the 2020 covid drop.
Saving small now, and spending time learning how all this stuff works is more than admirable.  No need to starve yourself or overwork yourself more than you already likely are now.  Get through school and get a good job, having any savings and minimal student loans will put you ahead of most of your peer group.

[Kwill]

This is my favorite "newbie" source:

https://www.etf.com/docs/IfYouCan.pdf

It's only 14 pages, and summarizes the Simple Path to Wealth mindset really well. Focus on what you can control:

- Your savings rate.

-  Conquer your fear of investing; bank accounts and CDs will not grow enough. You MUST invest.
...

For the OP's situation, I disagree. A student who is barely making enough to cover expenses first needs an emergency fund in case of unexpected situations. Without that, there's a risk of needing to pull investments at the worst time, rather than leaving them in to grow.

On page 14 of the source you linked, it talks about investment order. After getting out of debt, the next step is to establish an emergency fund large enough to cover six months of expenses, and that should be in safe places like T-bills, CDs, and money market accounts. Maybe the OP doesn't want to wait that long to invest in the stock market, but it would be safer to wait for at least some emergency fund.

[Kwill]

Job #1 is studies, you are investing in yourself and your future.
...
Saving small now, and spending time learning how all this stuff works is more than admirable.  No need to starve yourself or overwork yourself more than you already likely are now.  Get through school and get a good job, having any savings and minimal student loans will put you ahead of most of your peer group.

I think this bit is the answer.

[Fire enthusiast]

A few readings to get you started.

JLCollins’ Financial Independence Checklist for College Graduates (My path for my kid — the first 10 years)

JLCollins’ Stock Series

Books that will help you on your journey (can be found at your local library):
- Your Money or Your Life
- Designing your Life

They’re not specifically about investing, but they’re really good for people just starting out on their journey.

I visited JLCollins' website and thank you so much for referring me to such a great resource. I also read "Your Money or Your Life", which gave me a better understanding of financial thinking in everyday life as well as investment insights. Thank you!

[Fire enthusiast]

This is my favorite "newbie" source:

https://www.etf.com/docs/IfYouCan.pdf

It's only 14 pages, and summarizes the Simple Path to Wealth mindset really well. Focus on what you can control:

- Your savings rate.

-  Conquer your fear of investing; bank accounts and CDs will not grow enough. You MUST invest.
...

For the OP's situation, I disagree. A student who is barely making enough to cover expenses first needs an emergency fund in case of unexpected situations. Without that, there's a risk of needing to pull investments at the worst time, rather than leaving them in to grow.

On page 14 of the source you linked, it talks about investment order. After getting out of debt, the next step is to establish an emergency fund large enough to cover six months of expenses, and that should be in safe places like T-bills, CDs, and money market accounts. Maybe the OP doesn't want to wait that long to invest in the stock market, but it would be safer to wait for at least some emergency fund.

Yeah I agree. I am considering starting off by getting CDs to save my money to a certain amount and maybe try invest them after. (Btw, I am in the US).

[Fire enthusiast]

I want to save money so I can invest, but my salary from my part-time job barely covers my expenses. If I spend too much time on my part-time job, I'm worried it will affect my studies. I have friends who started managing their money by investing while they were students and I want to try it too but I don't know how to start or if it's a good option for me. Should I try and work more so I can actually save some money? Also, how much money do I need to save before I can start investing?

Job #1 is studies, you are investing in yourself and your future.
The sooner you live through a market drop, the better.  You will learn how you react when the stakes are pretty low.  I was perhaps lucky (?) to live through the 2000'ish dotcom bust when I have only been working a few years and had pretty low balances.  I held fast, questioned myself a lot, but ultimately didn't do any panic selling or other stupidity.  Knowing how I would react gave me better confidence in the 2008 housing crash, and the 2020 covid drop.
Saving small now, and spending time learning how all this stuff works is more than admirable.  No need to starve yourself or overwork yourself more than you already likely are now.  Get through school and get a good job, having any savings and minimal student loans will put you ahead of most of your peer group.

Thank you! Your words make me feel better. The hardest thing for me was to stop overthinking and start taking action. I was scared to start because I didn't have much financial knowledge, but then I realized that finance is everywhere in my life and I could start by saving and investing, which was easy.

[Kwill]

Good luck, @Fire enthusiast ! Thanks for coming back to comment.

[Metalcat]

Good luck, @Fire enthusiast ! Thanks for coming back to comment.

This! Stick around, ask questions.

By the time you graduate, you will be so ahead of the curve.

[Sandi_k]

This is my favorite "newbie" source:

https://www.etf.com/docs/IfYouCan.pdf

It's only 14 pages, and summarizes the Simple Path to Wealth mindset really well. Focus on what you can control:

- Your savings rate.

-  Conquer your fear of investing; bank accounts and CDs will not grow enough. You MUST invest.
...

For the OP's situation, I disagree. A student who is barely making enough to cover expenses first needs an emergency fund in case of unexpected situations. Without that, there's a risk of needing to pull investments at the worst time, rather than leaving them in to grow.

On page 14 of the source you linked, it talks about investment order. After getting out of debt, the next step is to establish an emergency fund large enough to cover six months of expenses, and that should be in safe places like T-bills, CDs, and money market accounts. Maybe the OP doesn't want to wait that long to invest in the stock market, but it would be safer to wait for at least some emergency fund.

Yeah I agree. I am considering starting off by getting CDs to save my money to a certain amount and maybe try invest them after. (Btw, I am in the US).

Note that I never said you shouldn't use CDs or HYSA. I was specifically addressing the distaste and fear of investing noted by the OP. The OP *must* get past that in order to be successful at attaining FIRE.

I posted the Bernstein pub because it really is a simply laid out, and clear plan - which makes all of our typing through the years look overblown. It's reduced to a clear game plan, that I find incredibly useful as a shared resource. Newbies typically don't want to read YMOYL, or TSPtW. 14 pages? You have a possibility of getting them to actually read it.

Regardless - welcome!