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George Relish is the Editorial Director at Quidable. Before starting his work at Quidable, he was a bank auditor for more than 5 years. He is passionate about reading science fiction, traveling, and football.
Handling one’s personal finances can be a challenging pursuit, especially if you’re still a student with a terribly limited budget. Thinking of how to save money on food and other expenses can seem like a constant struggle.
Fortunately, there are ways to overcome financial challenges. In fact, that’s exactly what we’re going to address in this post. We’re going to share our tried-and-true tips on how to improve your financial responsibility, even if you are a broke college student.
Learn How to Set a Realistic Budget
Setting a budget is one of the most basic financial skills you need to learn as you venture out into adulthood. Contrary to what you have probably believed, budgeting is more than just listing down your planned expenses each month. It’s actually an entire strategic financial plan for a set duration. Aside from your planned expenses, your budget should also include any form of income and savings.
Here’s a good rule of thumb: Financial experts suggest keeping the three “S”s in mind when formulating your budget— splurge, savings and surprises. And before you get all excited thinking about a new LV bag, splurge stands for any and all of you your planned expenses. Think rent, car payment, cell phone bill, etc. Savings refers to any money you put away for future use, like a vacation or a new Joybird couch. Finally, surprises stand for the amount of money you want to tuck away in case of an unplanned expense, like a flat tire or a new bike.
In order for your budget to work, you’re going to need something that you’re actually going to use and stay consistent with. Don’t like the hassle of tracking expenses? You can track your budget through a notebook or journal. We highly recommend checking out digital tools as well. What’s important is to keep your budget easily accessible at all times.
Finally, since we’re already talking about accuracy, do your best to keep your budget realistic. Don’t overestimate your projected income. Always give your planned expenses some wiggle space. More importantly, take your spending habits into account at all times. Don’t create a budget for an ideal you. Instead, you want your budget to represent your actual spending.
Related: 10 Ways To Budget For Your Gap Year
Set up an Emergency Fund
The most common thing that can kick a budget off-track is an unplanned expense. Sadly, that’s just how life is. Emergencies can happen at the most inconvenient of times. Fortunately, we can always take financial precautionary measures.
The best method is to set up an emergency fund. It is a savings account specifically dedicated to unforeseen circumstances. That being said, you can only use this money for absolute emergencies. How can you know if something is an actual emergency?
Ask yourself this: “Will I still be okay even if this issue persists?” If yes, then it’s not an emergency. If not, then it is.
For instance, not having the budget for your morning coffee is not an emergency, no matter how desperate you are for it. On the other hand, your car breaking down in the middle of nowhere is definitely an emergency unless you plan on pushing it all the way home and not using it ever again.
Start Building Your Credit Score
Here’s another financial goal that is never too early to start. Credit score is a grade that financial institutions look into to determine one’s financial responsibility. It is based on your financial history.
You can increase yours through strategic credit card use. Just make sure to pay all your bills on time for a slow and steady credit score increase.
You probably know that financial responsibility stems from staying as frugal as you can. But did you know that the people you hang out with also play a huge role in your spending habits? Spending time with people who enjoy shopping and partying can make sticking to your budget more challenging than it should be. You also want to stay away from people who have a “fake it till you make it” mindset. Most of them don’t really understand the value of money, only the appearance of it.
You will also want to find ways on how to decrease your spending each day. For example, you might want to consider cooking your own meals instead of ordering out. When you go grocery shopping, look for your favorite items in the bulk section rather than choosing the pre-packaged items that are going to cost more.
Lastly, keep in mind that the goal is not to be stingy. Instead, you want to find the balance between your needs and wants. For instance, there’s nothing wrong with shopping, especially if you are shopping around for the best deal. But rather than shopping when you’re bored, save your splurges for a reward when you reach a goal.
If you are going shopping, then make sure to spend your money wisely. Avoid making big purchases on impulse, especially with your credit card. This type of expense should be planned months in advance. It is ideal to have some money put aside for it already as well.
Don’t hesitate to look into available online coupons and similar offers. If your big expenses don’t necessarily need to be brand new, then you can scope out secondhand items. Thrift stores and consignment shops have come a long way. And even if your local town doesn’t have many brick-and-mortar shops, you can snag great secondhand items online at places like ThredUP.
Only need an item once? You may be better off renting. You can rent a variety of things online these days, from power tools to ball gowns.
On the other hand, we recommend taking note of upcoming sales and paying in cash, should you ever decide to push through with your big purchase.
Create a Debt Repayment Plan
Do you have some extra money coming in? You might want to consider paying off some of your student loans.
I know you don’t want to think about your loans, and it’s tempting to push the thought off for as long as you can. But some of your loans may be accruing interest already. And if you don’t pay anything off now, you’ll have a pretty sizable accumulation of interest following behind you in your graduation ceremony.
You’ll do best to create a debt repayment plan as early as possible, so you don’t feel overwhelmed. You might want to look into different debt payoff methods as well. Two of the most popular are the debt snowball and debt avalanche strategies.
The debt snowball method seeks to make minimum payments across all of your debt, paying off the smallest debts first and rolling over the payments you would be making onto bigger bills. On the other side of the spectrum, the debt avalanche method seeks to make minimum payments across all of your debt, too. But instead of tackling the smallest debt first, this method promotes paying off the debts with the highest interest rates before others.
Here’s a pro tip: No matter what repayment plan you decide on, automate your payments. This will make sure ensure the frequency and consistency of your efforts.
Find a Side Gig
Lastly, it is always ideal to have a side gig to bolster your main source of income. Feel free to get creative. You can look into passive earning methods like content publishing and affiliate marketing.
You may also consider freelancing during your free time. The nice thing about freelancing is that you agree to these gigs on a per-project basis, so it’s easy to squeeze them into whatever free time you have. UpWork and Fiverr are just two of the most popular platforms that connect employers with gig workers.
You might also do well to sell any of the clutter you have lying around as well. Old textbooks can sell for a hefty price. The same goes for secondhand furniture, appliances, outdoor equipment and clothing.
It is not always easy to stick to a budget. And we know it’s easier said than done with following through with the tips shared above. It can even feel as if you have to choose between making good college memories or staying on budget. But that’s just not true.
You can make fun memories without derailing your financial future. And even better, habits that you make now will continue to pay off long after graduation day.
You might also be interested in: Budgeting Tips To Save You Money [And 11 Things To Stop Paying For Now!]
How To Manage Money As A College Student:
- Learn How to Set a Realistic Budget
- Set up an Emergency Fund
- Start Building Your Credit Score
- Stay Frugal
- Spend Wisely
- Create a Debt Repayment Plan
- Find a Side Gig