Personal Finance 

PFCollege: Splurge Now, Save Later

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Personal Finance for College Students Series Seal If you were like me, you probably had some odd jobs in college to earn a few extra dollars and you’re probably wondering what you should do with them. Should you open up a Roth? Should you start that emergency fund? How about some stock or a Treasury bill?

Well, I think you should spend the money. Don’t spend all of it, definitely put a little bit away for a rainy day, but you should spend it. Why? You’re young and you’re banking that much coin so it really won’t make a tremendous difference down the road if you saved the few bucks you did earn in a Roth or if you spent it on beer or a game or whatever it is you’re into. Sure there are those calculators that say $100 when you’re 20 will equal $2,453,441.88 when you’re 65 but you’re only 20 once. When your friends want to go out, go out; don’t tell them you’re saving up your money so you can fully fund your Roth.

$2,453,441.88 won’t seem like crap if you end up a boring old dude without any fun. 🙂

This article is part of a series I started a while back called Personal Finance for College Students (hence, PF College).

{ 7 comments, please add your thoughts now! }

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7 Responses to “PFCollege: Splurge Now, Save Later”

  1. Dustin says:

    Jim I would have to completely agree. When I was in school (just last year and a few years before that), I barely had enough money to pay the rent. Regardless of how much I had or want to have later there was always time to go have a beer (or ten). I would say the money pulled in from odd jobs in college goes basically all to entertainment regardless of compound interest’s power; you will catch up later.

  2. I am also for spending it. When students earn money, the government (via the FAFSA form) assumes that a large portion of what you earn should be spent on your college education. You may be saving money to buy a car – doesn’t matter, FAFSA earmarks a large percentage of it to go towards paying for college. Already have a car, but need to pay maintenance and insurance? Same deal…college money comes first.

    Unfortunately, one of the most disjointed aspects of the financial aid process says that a student who works hard in the summer or during the school year to make a few extra bucks, gets all that money sapped into their EFC (Expected Family Contribution). All the while, their roommate, who spends all summer sitting on the couch, smoking pot, and watching ‘Sponge Bob’ gets better access to financial aid, because the lazy bum didn’t work.

    Spend it – spend it all. 🙂

  3. Foobarista says:

    But don’t run up CC debt – that’s where the compounding thing really matters. That $100 you put aside when you’re 20 may not help so much, but the $100 you put on CCs scoring pizza for the gang – and the thousand you spend paying it off and _not_ taking advantage of interest compounding later – is where it gets ugly.

  4. Bob says:

    I agree. Another consideration to make is that the money spent socializing is an investment in the future. The relationships you make in college can have an impact afterwards. Consider that $100 buying the gang a beer a good investment when you need a job from your buddy’s Dad’s company after graduation.

  5. Debt Hater says:

    hmm… that would be in direct contradiction to a lot of the things I’ve been told and have read and have been made to feel very guilty about. I agree with you completely, but I don’t think it’s many stuffed shirt PF advisors would say. I agree with Foobarista

  6. Ryan says:

    I disagree. College is a great time to begin developing the habits of hard work and thrift that can help you lead a good and prosperous life. I’ve never been a fan of the idea that young people should behave radically differently and be irresponsible just because they are in college. Why not live a balanced life when one is 20 and in college as well as when one is 23 and in the “real world”?

    Besides, with a bit of budgeting and common sense, you can easily make enough in a week to cover going out and having fun as well as saving. Many on-campus jobs are as easy as pie and pay around $10/hour.

    -Ryan (

  7. jim says:

    I don’t mean to suggestion that you behave terribly or irresponsibly, I just mean you shouldn’t surrender the enjoyment of your formative years by saving all you can for a Roth and other things – which is typical personal finance advice. I don’t recommend taking on credit card debt, with respect to spending I meant that you should spend within your means but that you should enjoy life… because it won’t be as much after college. 🙂

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