By Skipping College, a head start on earning is in order
With the scary state of student loan debt in America, it’s no surprise that about one-third of high school grads decide not to attend college. With higher education not being an automatic choice anymore, how are these young Americans going to establish themselves financially? It’s not as hard as you think. Though you might not top out with as high of a salary over your lifetime as a college grad, you do have a four-year (or more) head start on earnings. There are a lot of billionaires in the country who never attended college. If you’re smart and focus on building credit and savings, the eggheads might never catch up.
In order to make the most of what you can expect will be a lower salary, here are three smart financial moves to make…
#1. Make Them Kick You Out
The recent news item about the parents who went to court to get their 30-year-old son evicted from their house notwithstanding, the idea of living at home as long as possible (though not to this extreme) is sound. Median rent in the U.S. is over $900 per month. Presumably, your parents give you enough of a break on expenses that you could steer a significant amount of money into a savings and investments.
The trick here is not to do like the 30-year-old and create kids with no means of support, expecting (apparently) a free ride all the way through life, but rather to use this period to really put your nose to the grindstone and launch yourself into life with a solid financial footing. That means get a job, pay your parents something for expenses, and show them you’re making smart decisions. If your active and make the most of this situation, you can start out very much ahead. If your the lazy type and living off of the free ride- expect repercussions.
#2. Create a Nest Egg
The last thing a new graduate wants to do is start saving, but now is the best time to do it thanks to the miracle of compounding interest. Let’s say you have one thousand dollars in the bank. If you saved $500 per month for forty working years at 6 percent interest, you’d retire a millionaire. That’s a serious fact. How many of your college-going buddies will hit that number? Probably not many.
Those extra four years you’re able to save, plus not shelling out hundreds of dollars each month on student loans, can get you a serious leg up towards financial success. Your mission, should you choose to accept it, is to open up a Roth or traditional IRA (individual retirement account) and max that puppy out each year. Depending upon which type you go with, your money can grow on a tax-deferred basis until you’re ready to take it out.
#3. Building Credit by Any Means Necessary
You can’t even rent a car in America without a credit card. There’s no way around it. Successfully managing your credit allows you to eventually navigate the big purchases in life like a car, house, personal loans, or start your own business. As a recent high school graduate, you’re probably going to run into the problem that nobody wants to give you credit until you have credit. While there’s no denying that many people get into trouble using credit cards and taking out loans, managed properly, they can be a way to leverage yourself into the world of traditional credit sources.
The trick is to only a borrow a little, and pay it back on time. Rinse and repeat. These operations report timely payments to all three major credit bureaus, which is a good thing. Over time, not only will you have established that you’re a good risk in the event of an actual financial emergency, but you’re building a good credit history. That’s worth its weight in gold.
You have to work to earn success
The biggest challenge you will have in your new adult life is to get busy and get to work to have success. There are millions of people in today’s world who think they should just have money and wealth. Money and wealth rewards the people who work hard. Get busy with a job or career and work your plan. Talk is cheap and there are people out there who are a dime a dozen when you hear them talk about how successful they are buy cannot put gas in their gas tank. Don’t be one of these people. Get up everyday, go to work, and stack your cash.
Final Thoughts
The bottom line is that college simply isn’t for everyone. If it’s not for you, don’t think the decision leaves you essentially broke for life. There are real opportunities to still achieve financial success in the good old U.S.A. without a college diploma. With out having to payback $20K, $50K, or even $250K in student loan debt, you actually start out that much ahead.
