For the past 5 years, my wife and I have lived in a college neighborhood. It turned into an unintentional form of lifestyle arbitrage – a smaller form of geoarbitrage that you could think of as neighborhood arbitrage. That’s where you live in a neighborhood that costs less than a neighborhood you might otherwise live in. The time we spent living in this neighborhood – living in a house far below our means – allowed us to set up a really strong financial footing for ourselves.
We didn’t think of it at the time, but living in a neighborhood primarily populated with students also came with some other unexpected advantages. We never felt any pressure to keep up with our neighbors, for example. I’m reminded of this fact now that I live in a much wealthier neighborhood, with wealthy families constantly upkeeping their yards and doing renovations to their houses. In my old neighborhood, simply cutting the grass regularly made me look better than most people.
Now that I’ve moved into a more adult neighborhood, I thought it’d be worth reflecting on what I’ve learned from observing the college kids that I used to live around. We don’t often think of college kids as being financially savvy, but there’s more here than meets the eye. College kids – by the very fact that they are students and have little money – have no choice but to be financially savvy.
Here are a few things I’ve learned (and implemented) from watching the college kids around me.
It’s Okay To Have Weird Living Arrangements
For almost 5 years, my wife and I rented a room in our house on Airbnb. The room wasn’t on a separate floor or anything either – it was literally next to our bedroom. We also only had one bathroom on this floor, so that meant we shared a bathroom with our Airbnb guests.
Many people thought this was a strange living arrangement, especially since we were two young professionals who made a good living. The way we saw it, we were still young. And this weird living arrangement allowed us to live for free most months. If there was a time for us to live weirdly, doing it when we were young and had no kids was the time to do it.
College kids have always been good at figuring out weird living arrangements that allow them to live for cheap. They often pack multiple people into a house. Sharing bedrooms is fairly common too. It seems crazy to me that when I was in college, I lived in a dorm with a stranger for a year, literally sharing a tiny room. And when I moved to off-campus housing, I lived with four other guys in a 4 bedroom house.
As a mid-30’s adult, those living arrangements seem crazy to me now. A lot of us have the idea that we have to live in a certain way. But when you watch how college kids live, it becomes apparent that the way we live is a choice. We choose our homes and our neighborhoods. We choose whether we live alone or with other people. If you opt to live weirdly, you can often make huge financial progress (remember, housing for most of us is our largest expense).
Living weird doesn’t have to be forever. I used to have strangers in my house every day when I did Airbnb. And I used to live with roommates. I don’t do that anymore because I don’t want to. But I could if I had to.
Recognizing that the way we live is often a choice and not a foregone conclusion is something I think is important to think about.
If It Has Wheels, You Can Use It To Get Around
I’ve always liked living in a college neighborhood and seeing all of the creative ways students use to get around. People use bikes, of course, but I’ve seen students traveling using scooters, skateboards, rollerblades, and probably some other random modes of transport I can’t even remember. If it has wheels, I guarantee some college kid has figured out how to get around with it.
Transportation is a major expense for most people, typically a top-three expense in most household budgets (after housing and food). If you can reduce your transportation expenses, you can have a lot more money to spend in other areas that might be more meaningful to you.
College kids have always understood this. To combat this expense, they figure out more affordable ways to get around. They live in neighborhoods where it’s possible to walk. They take the bus when it makes sense (and do it for cheap because they get subsidized bus passes). But importantly, they opt not to use a car, instead using cheaper forms of transport. I think there’s something to be learned here.
I think part of the reason I’ve always been so comfortable using a bike to get around is that I’ve never felt out of place biking in my neighborhood. It’s something that everyone does because that’s the cheapest way to get around.
You Can Probably Make It On Less Than You Think
The most important lesson I’ve learned from observing college students is probably just how little you can spend if you have no choice. We assume that we need a lot of things to live well. But a lot of the stuff we think we need is a choice. When I was in college, my yearly income never made it over $10,000 or so in a year. I don’t think I ever made more than $5,000 or so when I think about it. And yet, somehow, I was still able to enjoy my life even though I didn’t have a lot of the things I have now.
I think we can take some comfort in knowing that all of us have probably gone through a period in our life like this, where we were living on basically nothing. It’s not something I’m planning on doing again, but I know I’ve done it before. In a worst-case scenario, I can probably do it again.
Keeping lifestyle inflation in check early in my career definitely set me up on a more positive financial footing. I had a six-figure salary for a long time. And even though I made that much money, I spent about what I might have spent as a broke college student. It’s one of the best pieces of advice I can give to anyone. Live like a student for at least a little bit. You’ll be surprised at how much you can save if you can do this. And it’s much easier to do this when you’re barely out of school versus later when you’ve already inflated your lifestyle.
My life is obviously in a very different place compared to where I was 5 or 10 years ago. I’m married. I have a kid now. These are all things that increase my cost of living. I’ve admittedly had some massive lifestyle inflation over the past few years. But there’s no doubt, the things I think I need now are choices. I didn’t need them before.
We’re getting settled into our new house and are starting to learn about the neighborhood. It’s a very different feel. Impeccably manicured lawns. Houses with wealthy families and old people. I like the neighborhood because I’m getting older and this is the type of neighborhood I want to live in right now. But I don’t know if I would have been as well off financially if I had been living in a neighborhood like this for the last 10 years.
My son still goes to daycare around our old house, so I’ll still get that college feel every time I drop him off in the morning. And we’re in the process of getting our old house rented, probably to college kids also. So I’ll still get a feel of that college neighborhood when I go over to cut the grass or check on any future tenants. Even though I’m moving away from this neighborhood, I’ll still be around I’m sure.
Most college kids still have a lot to learn when it comes to life and money. But you know something – I think we can learn something from them too.
I’ve been following your blog for the past year or so, and I’m not sure how to describe it, but I find your blog comforting and reassuring as I’m struggling to figure out how much longer I can last at my demanding law firm job. I got married when I was still in law school, and we lived in a college town at the time, so looking back we definitely saved quite a bit by “living like college students” back then, and when I first started working! Even though we’ve increased our spending to a certain degree and have since bought a house like you guys, I’m hoping to remain intentional about how we spend our money, especially if I want to escape these golden handcuffs at some point soon haha.
Gary Crawford says
One item you did not discuss was that many of these students are also undertaking enormous debt.
Mrs. FCB @financialchainbreakers says
I love this post. It’s like an even more extreme version of what Stanley talked about in The Millionaire Next Door with respect to living in older, more-modest, often-more-blue-collar neighborhoods. Blending in with the spending habits of college kids is a crazy-cheap way to go, and props to you for noticing that and tapping into it. I have a kid in college, and I’ve definitely gotten some great ideas by watching him. He hustles, finds creative ways to make money, and creative ways to save money that weren’t even on my radar. Heck, I even followed his lead and drove for DoorDash for a bit because I was tired of him coming home and talking about how he made $100 while I was just sitting on my tail.
David @ Filled With Money says
It always amazes me how great some college students situations were. I remember when I was in college, I had something like $30 – $40k saved up. I thought I was doing phenomenal! That seemed to be in the top 1% of college students!!
Until I realized my friend worked half the hours I did while having the exact same amount.
Ah well, back to the drawing board.