Key things I wish I had known about money management in college

Not much was spent on things including college. So, perhaps people of my generation didn’t think much about scientific investment methods. You hoped to get a job with good benefits and good growth and hoped that it would meet your short and long term needs. Today, I’m vice president of technology at one of the largest banks in the world, where there’s a whole range of money and investment management business, and there are a few things I definitely wish I had money for when I got back to college. Knew about-discipline and the power of compounding.

My approach to money should have been like that of a bear getting ready for hibernation all alone. The bear instinctively knows that there will soon come a time when it will be unable to hunt for food and that even if it is able, there will be no food source available. So, it eats and eats and eats while it can and builds up reserves of energy that allow it to comfortably get through brutal winters while hibernating or entering a state of torment. . This is why the approach towards money should be very similar, with financial independence as the end goal.

In college, you’re probably living rent-free with parents, or they’re paying for your dorm or other accommodation. Most of the basics like food, shelter and clothing are still sponsored by your parents. As college comes to an end, the reality of adulthood begins to sink in. You know you’ll need to support yourself soon.

The immediate goal is to start earning. How you do it depends on your risk tolerance. You either work a part-time job, a 9-5 job, or start a business or enterprise. It soon takes care of basic needs – you’re able to feed yourself, afford a vehicle to get to work, and maybe pay a little rent. nothing unusual. There is enough income to earn.

Once this is settled, your “wants” surface… you want to get married or start a relationship. Sometimes both partners are earning. Sometimes only one. You “want” to have children, and you “want” to take care of them. Your parents are old and retired and probably need help, and you “want” to take care of them. Your “wants” increase even more. You “want” a big house, a big car, that expensive watch, an expensive vacation… it starts to add up. I wish I knew how to actively manage my career so that my income grows as I wish. And to advance my career, I wish I knew about the “need” to upskill.

This income-to-expense balance should be like calorie management in order to lose or gain weight. To lose weight, calorie intake must be less than calories expended, and vice versa for weight gain.

Similarly, income needs to outpace expenses in order to create a surplus in the form of savings. Let’s say this happens and the savings keep accumulating. Everything is fine, isn’t it?

Not so… just saving is like losing weight, but you slim doesn’t necessarily mean you’re healthy. To be ready for the future, savings need to become a healthy nest egg. And for that, these savings need to be put to work to earn more money. How you reinvest depends on your level of risk tolerance; However investment strategy is a different topic.

That’s all fine, but what’s with the discipline? Just like a bear that feeds non-stop to store up energy before winter begins, you must maintain the discipline to keep income ahead of expenses, keep expenses within your means, and survive college until retirement. The savings should continue to increase over the period, one should prepare for it. Long winter, so to speak.

Save a portion of the income every month from day one, even if it is a very small amount, gradually increasing the portion over time.

Whenever income increases, focus on increasing savings proportionately.

All of this leads to financial independence, which ultimately gives you flexibility in both your career and life. And isn’t that what we all want? So, go ahead, embrace the bear inside you.

Shalini Thadani is Vice President, Technology at Wells Fargo, India and the Philippines.