C(r)a$h Course in Mon€y
In the wake of the GameStop investing craze, many students got swept up into the hype without necessarily understanding how finances work. Though he is not an expert by any means, Gavin Aquin has been managing his own money without help for the past three years and has found a decent modicum of success. Here are his quick financial tips to get ahead of our capitalist overlords who want you to be poor.
GAVIN AQUIN // FLAT HAT MAGAZINE
Let’s talk money. We have such a taboo around talking about money in the United States, and honestly, it is a shame — often, it feels like all of the best-kept secrets surrounding the accumulation of cash are being hoarded by the Jeff Bezoses and Bill Gateses of the world. Meanwhile, the rest of us run around like chickens hoping that one day we will be able to buy a house or whatever material goods we happen to desire. Fortunately, we live in a digital age where information and learning resources are freely available.
Over the past year, I have become enamoured with the idea of tracking my spending, accumulating points, and watching the stock market. The economic shock of the pandemic had me pinching pennies left and right and encouraged me to ensure that the money I was spending gave me significant returns. I have become quite good at navigating the system — I have so many rewards points that I plan to use for travel; my stock portfolio is great; I do not pay fees that I do not need to pay — all without the help of my parents.
For legal reasons, this article is for entertainment purposes only — I am not your financial advisor! These are simply the tactics that have worked for me, and your mileage may vary.
Banking
If you are a college student paying for banking, you are getting ripped off. Actually, I want to amend that. If you are anyone paying for banking, you are getting ripped off. Unless you have a fancy, private client relationship with a bank, you do not need to be paying to have money. Many people I know just use the same bank as their parents and pay a $10+ fee a month because they simply do not know that there are other options.
Thankfully, you do not even need to leave your bedroom these days to open a bank account. With the advent of online banking — and online-only banks — many of the costs associated with branch networks are no longer passed onto the consumer. This is great because for me, the lobby of Chase Bank is quite literally the closest thing to Hell on Earth. With that said, everyone reading this who does not have both a checking and savings account should go online and do so right now. No, I do not mean that 0.01 per cent APY interest-bearing savings account your parents signed you up for as a child. Those do not make you money. Online banks including, but not limited to, Discover, Capital One 360, and Ally Bank offer great high-interest savings rates that are consistently higher than those of brick-and-mortar banks. I strongly encourage you to shop around and consider your options; keep in mind, however, it might be more convenient for you if your online savings and checking accounts are at the same bank.
If you are employed, make sure to update your direct deposit information with your employer so your paycheck can be automatically deposited into the proper accounts. The split I currently use is 25 per cent into checking, 25 per cent into brokerage, and 50 per cent into savings. Ideally, you send the money that you need to pay for your rent, credit card bills, car note, and other necessary monthly expenses into your checking and then pocket the rest. My spending has been lower recently, so I have been mainly focusing on saving/investing, but I encourage you to consider your circumstances so that you can craft a budget which best suits your needs.
Credit Cards
Oh, credit cards. Everyone loves to talk about how horrible and dangerous they are. Yes, if you treat credit cards like free money, you can very quickly rack up a bill that you cannot pay and will end up hurting yourself in the long run. Alternatively, you can stick it to the big banks by using your credit card so well that you pay nothing in interest and reap all the rewards. When I turned 18 and got my first job at a retail store that shall not be named (it might have had something to do with a whale, but who knows), I immediately signed up for the Discover it® Student Cash Back Card. For three years, we have been through thick and thin, and the company is always eager to increase my credit line without my having to ask for it first. Although I have since acquired nicer credit cards with fancier rewards systems, I will always appreciate my first.
The key to using credit cards, I have found, is to treat them like cash. I exclusively use my credit cards to make all of my purchases and not my debit cards. When I carry both a debit and a credit card, I get tempted to use my debit card to pay for things when I should be using my credit card for two reasons: 1) I get rewards points for purchases on a credit card, but not my debit card 2) the money in my checking account should only be for bills — if I spend it all, then I will have trouble paying for my credit card. Ideally, you should be paying off your credit card in full every month. Obviously, that is not possible for everyone all the time; when I have to carry a balance on my credit card, I make sure that it is not higher than 30 per cent of my total limit.
This all sounds complicated, so why even bother? Simply put, your credit score determines so much about your adult life — for better or for worse. As much as we may not enjoy it, we live under a peculiar sort of consumerist capitalist system where those who play it smart get ahead in life. A good credit score and history will make it easier not only for you to get home and car loans at lower rates but also to rent apartments, and in some cases, even get employed at certain companies. There is more to personal finance than just having a three-digit number next to your name — the length of your credit history matters as well. For example, by having three impeccable years of responsible credit usage to my name, I am already ahead of those who have not been using credit cards and building up their credit scores. The longer you wait to establish yourself in the financial system, the greater your disadvantage will be.
Investing
I am sure you are all aware about the GameStop stock saga. Since I have unofficially become the money-guru of my friend groups, many people have texted me asking for advice about investing. Investing is much more than just hopping onto the latest trends and hoping for large, short-term returns. In fact, the sort of risky, credit-financed options trading involved in the GameStop shortsqueeze is not only detrimental to your mental health but it also has the potential to ruin you financially if you are not fully knowledgeable about the process.
If you are interested in investing, the main roadblock is that you first need to find a brokerage. I encourage you to shop around and find a company whose pricing and services best match your needs. The success of applications such as Robinhood and Webull have made investing accessible to the average person, with the added benefit of more established firms such as Fidelity and Charles Schwab loosening their restrictions on pricing and required capital in order to compete in the evolving market.
When you purchase a stock, you are essentially buying partial ownership in a company, allowing you to benefit from the financial gain of the company but on the flip side, passing down losses when they arise to you, as well. Most of the time, this kind of investment will not make you rich in the short term, but if you shop around and do market research, you will find that the value of your investments has the potential to grow over time and enrich you down the road. A less risky investment (lower risk does mean though that there is a lesser chance of a large positive return) is that of a bond which is essentially a loan to a business or a government. Additionally, if you are not sure if you want to invest in a certain company, you can invest in mutual funds, which use your investments across many curated assets. However, this option is more expensive, as you are passing on the labour of research to a third party.
Whether you are a growth and numbers-oriented person or hoping to graduate college without personal debt (or at the very least, not broke from partying multiple nights a week at Precarious Beer Hall), it is important to have your finances in check. If you are a junior or senior, it might help to get your finances in order (and your bad habits under control) before you graduate. I definitely had to learn that I can indeed live without more than one Wawa run a week.
