Spend or Save?

SavingsPiggyBankOne of the topics students frequently ask me about is how should a typical college student get started in planning for their financial future. While I am able to go into more detail at my seminars, my advice is pretty simple: in order to plot a course to get out of debt and also plan for you financial future, you MUST work on a sensible debt reduction plan, BUT you must also establish an investment portfolio that will at least allow you to outpace inflation and overcome the opportunity cost associated with the many alternatives available to you.

One of my favorite ways to suggest that people look at the concept of saving and investing is what is typically referred to as an automatic savings plan if it is into a savings account or, if into an investment account, an automatic investment plan, or AIP.

Michael Rubin from About.com has a good article that explains what AIPs are all about: Automatic Investment Plans

I like to refer to AIPs as “unconscious saving”. The exact opposite and what often gets in the way of our financial success is what I disdainfully refer to as “unconscious spending” – throwing money away unnecessarily. Sure, we all know better, but spending money on ATM fees, account maintenance fees, overdrafts – it’s just crazy!

A good article on the typical ways we often waste our hard-earned dollars comes from Erin Burt at Kiplinger.com:
Wasteful Spending

Repeat after me: savings = good, spending = bad. Of course, if it’s that easy, everyone should be doing it. Hey – wait. It IS that easy!

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