College Students: Stop Spending Your Future Self’s Money

From Podcast #193: What of Lump Sums, the one in which Jesse delivers a public service announcement for college students everywhere.

College students, are you there? If you have taken or are considering taking a student loan, the next three or so minutes are for you.

You took a loan and suddenly you have a big, big sum of money. And it sort of feels like you’re rich. But it shouldn’t.

It should feel like you are just dirt of the dirt poor. This is a really important point. If you are living from a loan you are poor, the poorest.

How you handle this loan—how you handle this influx of cash—will have long-term impact on your financial future. Find some old people, in their mid to late 30s, and ask them about their student loans. Many of them will still be paying them off. So tread lightly.

I want you to break up that big pile of money into smaller, more manageable ones immediately. And then I want you to take that amount and break it up into specific jobs—start following Rule One. And be sure to consider Rule Two, where you’re looking ahead, thinking about those larger, less frequent expenses and planning for them on a monthly basis.

The idea is, if you’d had a loan of, for easy math let’s say $9,000, you would say, “I’ve got to get through nine months before I just sprint and work my tail off during the summer and make a ton of money so I don’t have to take very many loans—or any loans at all.” The key is to break it up into those monthly amounts, so you have $1,000 a month.

And you might say, “Well, tuition is due right away.” Okay. Pull out tuition; pull out that Rule Two that’s happening right now, that Rule Two larger, true expense. Pull that out. Then break up the rest into nine months and you’ve given yourself a job, a salary, a pay check—not to be outdone by the actual pay check, where you’re working, stressing, working two jobs, going to school, juggling a ton of things, trying to minimize that student loan debt as much as possible.

Don’t fall for the lie that you have to take on the loan. But if you do have to, if it is the only way and you’ve exhausted all other avenues, then make sure that you do not think, for even one second of a moment, that you suddenly have a lot of money.

It’s not yours. This money belongs to your future self and you will ultimately be responsible for that money. It’s future yours. Do your future self a favor and don’t spend all of their money.

It may feel a lifetime away right now, but at some point down the road, six months after you graduate, the loans come due. And you don’t want future you to be totally strapped and overwhelmed and out of options because current you spent all of their money.

This is where I should sell the fact that we give YNAB to all college students for free, except it is free, so there isn’t a whole lot of selling involved. If you are in college, get YNAB for free, take loans with caution and treat them like the real money they are.

For more about how to stop living paycheck-to-paycheck, get out of debt and save more money, faster—subscribe to the YNAB podcast today! Until next time, follow YNAB’s Four Rules and you will win financially. You’ve never budgeted like this.