Being good with money is about much more than simply making ends meet – and when you’re a student, it can often feel like simply trying to get through the month without running out of money is your top priority. Don’t worry if you’re not a math genius; in fact, you don’t even need to be good at math to be good with money – as long as you’re OK with basic addition and subtraction.
When you have good financial skills, life becomes much easier, especially when you are already living on a tight student budget. How you spend your money will impact your credit score and the amount of debt that you need to deal with. If you are struggling with money management – for example, if you make enough money even while studying, but are living paycheck to paycheck or running out of money before the end of the month, then the good news is that there’s a lot you can do to improve your financial habits.
When you are faced with a spending decision – particularly a large decision, like buying a new piece of tech for college or relocating to study, it’s important that you don’t just assume that you can afford something. Take some time to think it over and confirm that you can actually afford something and that the funds you’ll be spending haven’t already been committed to another expense. As a result, you can be assured of no nasty surprises, like having no money left to pay your rent or bills.
This means using your budget and the balance you have in your accounts to determine whether or not you will be able to afford a purchase. Bear in mind that even if the money is available, you may not be able to actually afford it. First think about any bills and expenses you will need to pay before your next paycheck.
#1. Have a Budget:
Many people do not have a budget because they don’t want to spend time going through what they think will be a boring process of listing out their expenses, adding up the numbers and making sure that everything is in order. If you aren’t great with money, then avoid making excuses when it comes to budgeting. If it takes a few hours each month to work out your budget, why not? Instead of putting all your focus on the process of sitting down, going through your money and coming up with a budget, think about all the additional value and ease that it will have for your life.
#2. Use Your Budget:
Many people make the mistake of sitting down and coming up with a budget, only to completely forget about it and fall back into their own spending habits. Your budget is useless if it’s tucked away on an app on your phone that you never open, on a spreadsheet you’ve not looked at since, or gathering dust in a cabinet or on your bookshelf. To get the most from your budget, put it somewhere that you are likely to see it often – pin it to your wall or put in on the fridge door and refer to it regularly throughout the month to help you manage and control your spending decisions. When you pay bills and other necessary monthly expenses, make sure that you update your budget accordingly. After a while, at any given time during the month you should be able to know how much money you have to spend and any expenses that you have left to pay.
#3. Give Yourself a Spending Limit:
Don’t tie all your money up in expenses and account for every single penny. Giving yourself an allowance for spending each month on things that you enjoy, but aren’t really needs can be a good way to manage your money and help you avoid missing payments on any regular expenses. For example, once you’ve gone through your budget, determine how much money you could comfortably spend this month on non-essential spending and allow yourself this amount.
The net amount of money or income that you have left after you subtract your expenses from your income is a critical part of your budget. If you have any money left over, you can use this for entertainment, fun, or spending on anything else that you want – but don’t go crazy with this money as you will need it to last the entire month. Before you use it to make any larger purchases, check how much you have left and make sure that it’s not going to interfere with anything else that you have planned.
#4. Track Your Spending:
Over time, lots of little purchases can quickly add up and before you know it, you’ve spent a lot more than you’d actually hoped or expected to – maybe even going over your budget. That’s why it’s a good idea to start tracking your spending in order to discover any places where you may be knowingly or unknowingly overspending. You can do this by using an app that tracks how much you spend on your card, or go old school by keeping receipts or writing everything that you spend down in a journal.
It may be time consuming, but this exercise can be one of the best ways to learn more about yourself and your spending habits, allowing you to determine what you need to do in order to make changes. When it comes to changing a habit, the first step is to figure out why and how we do it – then it becomes easier to focus on what needs to be done to change. When tracking your spending, you’ll quickly find out where the majority of your money is being wasted, and it’ll be easier to know what to avoid in the future.
#5. Avoid Committing to Recurring Monthly Bills:
Just because your income might qualify you for a certain loan or credit card, don’t think that you should take it. Many people, especially students, believe that they probably wouldn’t be accepted for credit that they can’t afford – but a lot of the time, this couldn’t be further from the truth. You would probably be glad of some extra money when you’re working hard studying for an FNP program, but if you don’t really need it, it could lead to financial difficulty you didn’t need. So, think twice before you sign a contract for a shiny student credit card or boost your student overdraft – do you really need it, or are you just saying yes to it because it’s offered?
Bear in mind that the bank only knows the income that you have reported and any debt obligations that show up on your credit report – they’re not aware of anything else that you have to pay each month which could hinder your ability to repay a credit card or loan. It is up to you to consult with your monthly budget and determine whether or not it’s the right decision for you.
#6. Shop Around:
Simply taking the time to shop around and make sure that you are paying the best prices for everything that you get can make a big difference to your monthly spending totals, and make it easier for you to save some money. For example, if you drive a vehicle, don’t just go with the first offer from your insurance company when it comes to renewal – often, shopping around at comparison sites and calling up different insurers can be a good way to find even better deals that could save you a lot of money.
And, the same goes for essentials around the home – you can’t get away from paying out expenses like utilities, but you certainly don’t have to pay the maximum for them. Search the web and speak to friends and family to discover if there are any cheaper deals that you could be taking advantage of. And, don’t just reserve this for large purchases – there are many ways that you can save money on the small stuff, too. Look for vouchers, coupons, and cheaper alternatives to everything that you buy, whenever you can.
#7. Save Up for Large Purchases:
Practicing the ability to delay gratification will go a long way when it comes to helping you manage and save your money better, avoid getting into financial difficulties, and avoid getting in debt. When you are able to put off making large purchases while you save up for them, rather than sacrificing important essentials in order to be able to pay or borrowing money to pay back later, you don’t just save money in the long term, but also give yourself some extra time to decide whether or not the purchase is actually necessary and potentially even find a cheaper deal in the meantime.
In addition, saving up rather than turning to a loan or credit card means that you will spend less over time because you won’t be paying any interest on your purchase. And, if you save up over time rather than skipping essential bills or other expenses to buy something, then you will also avoid the consequences of missing those payments.
#8. Limit Credit Card Purchases:
Credit cards can be great in emergencies and a good way to keep your credit score high, but you will need to be sensible with them in order to make sure that you are getting the most from them. Credit cards can often be a worst enemy for a bad spender; it’s easy enough to simply turn to a credit card without considering whether or not you will be able to afford to pay off the balance.
So, resist the urge to use your credit card for spending on items that you don’t actually need. If you’re concerned about improving your credit score, then you might want to consider using the card for purchases that you’d normally pay for, such as your grocery shopping or putting gas in your car, and repay them straight afterwards. Try to keep your credit card balance at least 50% below the limit at any given time.
#9. Contribute Regularly to Savings:
Whether you’re earning money on a monthly or weekly basis as a student, contributing to savings – no matter how small – is a great habit to get into now, and you’ll be glad of the money that you’ve saved, whether during your studies or once you graduate. The best way to get into a regular savings habit is to contribute each time you get paid – take a small amount and pay it into your savings account straight away, so that it becomes just another regular expense that you will need to deal with.
If it helps, you might want to consider setting up a regular payment from your checking account into your savings account. And, if you’re worried about dipping into your savings when you don’t really need to, it might be worth getting an account that you can lock for a certain amount of time, or handing your cards over to a trusted relative or friend for safekeeping until you need them.
#10. Remember – Practice Makes Perfect:
Finally, bear in mind that getting better with your money will take practice, particularly if you’re used to spending as and when you want and haven’t really put much effort into improving your spending habits before. It will be easy to fall back into old habits so it’s important that you are able to recognize any unhealthy spending habits that you want to change, and know when you’re exhibiting these behaviors so that you can stop them.
Don’t beat yourself up if you don’t get it all straight away – regular savings, budgeting, and generally being sensible with money does not always come naturally, and the important part is that you continue putting in the hard work to change your habits and practice as much as possible. After a while, you’ll be glad that you did.
As a student, living on a tight budget can be tough. These money management tips can help you be better off financially, not just as you study but well into the future.