5 Simple Steps for College Students to Achieve Financial Freedom Faster

5 Simple Steps for College Students to Achieve Financial Freedom Faster

Key Takeaways

  • It's never too early to learn about financial independence and the steps you need to take to achieve it.
  • While in college, you can work on building or improving your credit score by monitoring your spending and budgeting for all expenses, known and unknown.
  • Proactively seek out financial education materials, such as books, podcasts, YouTube videos, and networking opportunities.

1. Start Building or Improve Your Credit Score

Having a credit card is great—if you use it wisely! Please do not be confused by your credit balance and limit.

It is crucial to either start your credit score on the right foot or work on building and improving it. At a young age, you're more at risk of your credit score declining if you spend without thinking.

You’re unlikely to be approved for a high credit limit on your first card. Understanding the potential downside of overleveraging your credit utilization is crucial. Typically, you should use no more than 30% of your total available credit. If you have a $1,000 limit, aim to keep your balance under $300.

Why does your credit score matter? Lenders look at your credit score to determine your eligibility for loans, such as mortgages, auto loans, and credit cards. A higher credit score increases your chances of getting approved.

Additional Benefits of a Good Credit Score:

  • Lower Interest Rates: A higher credit score can lead to lower interest rates and better rewards programs on credit cards. For example:

  • Borrow $400,000 at 7.5% interest, and your monthly payment will be $2,797.

  • Borrow $400,000 at 6.5% interest, and your monthly payment will be $2,529.

  • That 1% difference adds up to $96,690.94 over 30 years. Don’t leave almost $100,000 on the table due to poor financial habits!

  • Renting an Apartment: Landlords often check credit scores to assess rental risk. A good credit score will affect your ability to rent, with many landlords requiring a minimum score between 600 and 700.

2. Start Budgeting

There are countless software products and advisors that can help you budget, but to keep it simple, I recommend the following:

  • Track Your Net Income:

  • If you have a part-time job, paid internship, or other income sources, know what you bring in monthly.

  • Make a List of Your Expenses:

  • Start with fixed expenses like rent, groceries, school supplies, utilities, gas, phone/internet bills, and car loans.

  • Then, list variable expenses like entertainment, dining out, food delivery, and travel.

  • Estimate Monthly Costs:

  • Fixed expenses are straightforward since they’re consistent.

  • For variable expenses, review your last three months of credit card and bank statements to get an average cost for each category. You might find some categories are more expensive than you thought.

  • Adjust Your Budget:

  • Are you net positive, negative, or breakeven? If you have more income than expected, move on to the next step. If your expenses outweigh your income, cut back on variable expenses or find additional income sources.

3. Open an IRA

An IRA (individual retirement account) offers tax advantages over regular brokerage accounts and helps build good saving habits.

Types of IRAs:

  • Traditional IRA:

  • No taxes on contributions or gains, but you pay taxes on qualified withdrawals in retirement.

  • Roth IRA:

  • Pay taxes before you contribute, but qualified withdrawals in retirement are tax-free.

How to Open an IRA:

  1. Choose a ProviderBanks, credit unions, brokerage firms, or mutual fund companies.
  2. Complete an ApplicationProvide personal and financial information, including your Social Security number.
  3. Fund the Account: Make an initial deposit, either one-time or through regular deposits.
  4. Select Investments: Choose from stocks, bonds, mutual funds, ETFs, etc. For beginners, consider mutual funds or ETFs to reduce risk.

4. Absorb Financial Education Material

You can gain significant financial knowledge without a formal education. Many successful investors don’t have an MBA or finance degree.



  • Rich Dad Poor Dad by Robert Kiyosaki:
  • Highly recommended for those new to financial conversations.
  • Think and Grow Rich by Napoleon Hill:
  • Considered one of the best personal development books, influential in shaping thoughts on success and wealth.

5. Talk to a Financial Advisor

After gaining a basic understanding of investment options and financial terms, speak to a financial advisor.
Some advisor assigned homework, such as reading books, listening to podcasts, and using calculations to analyze future investment outcomes. Over time, our conversations became more tactical.

Final Thoughts
You’ll learn a lot in college, but financial literacy isn’t typically part of the curriculum. Proactively seek it out! Talking about finances might not always be exciting, and you may get frustrated with your current financial position. Remember, most of us were once in your shoes with little to no money. A clear financial strategy will pay off in the long term and open up unexpected opportunities.
Money leads to freedom, and how you use that freedom will significantly impact your happiness.

Ready to take your financial future into your own hands? Start implementing these steps today and see the difference!

Trae Williams
(571) 487-7771

12923 Fitzwater Dr. Nokesville, VA 20155 
(703) 594-3800 | jacobsandco.com

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