Take advantage of financial opportunities now to prosper later | Opinion


You should do more with your money.

I know that sounds like an ironic statement considering most of you reading this are probably college students with very limited financial resources. I also have a somewhat limited budget, given that on campus I have a job with minimal hours and most of my monthly expenses eat into the small paycheck I get from this job.

Considering that my income often goes directly to spending, I’ll give you my first advice on spending: get a credit card. Most of you probably have a debit card to pay for groceries or Amazon orders, but there’s a better way to pay for it all. Credit cards are vastly superior to debit cards and I’ll give you a few reasons why.

The best reason every college student should have a credit card is that it builds your credit score. As soon as you graduate, you’ll be looking for a house and a job, and you’ll be hard pressed to find a bank willing to give you a loan without a good credit score. The best way to use a credit card to build your credit score is to use it for small purchases and then pay the bill on time and in full.

Another good reason to get a credit card is security. Generally, if a fraudulent charge is made to your debit card, you are more likely to have to cover these charges. Also, your debit card is directly linked to your bank account, which becomes a liability if your card is stolen. Credit cards give you an extra layer of protection against fraud through the Fair Credit Billing Act. As long as you report fraudulent charges, the credit card company cannot hold you responsible and you can recover those fraudulent charges.

One of the biggest reasons I’ve heard for not getting a credit card is concern about high interest rates. However, if you do as I advised and pay your bills on time, you won’t even have to worry about those high interest rates since they won’t apply to you.

The other big reason I’ve seen for avoiding a credit card is the risk of debt. As long as you use a credit card responsibly and don’t spend more than you would otherwise spend with your debit card or money, you won’t be at risk of going into debt.

Another good thing to consider for your financial future is investing. Nowadays, it has become so easy for anyone to participate in the free market. Robinhood is an accessible and viable option for anyone new to trading. I’m not suggesting you day trade, but rather put a few dollars each month into an index fund and let it accumulate over time. Suppose you invest in the SPDR S&P Dividend ETF with a monthly contribution of $10 and, assuming an annual return on investment of 15%, you would have close to $1 million by 2070, when most between us will be 70 years old.

Even though many of us currently don’t have a lot of financial power at our disposal, that doesn’t mean you can’t do your best to do what you are capable of with the tools you have been given and the resources you currently have.

The opinions expressed are those of the author and do not necessarily reflect those of The Torch.

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