Managing your finances is like a rite of passage into the next phase in your life. One moment you are saving up all the allowance or prize money you’ve received, and the next, you need to account for how to make your own income and plan for the future.
It seems overwhelming, doesn’t it? After all, there are numerous budgeting rules, savings approaches, and financial regulations that you must take into consideration. It might almost make you want to time-travel back to your childhood. We get it.
But the freedom and sense of power that accompanies being financially literate is an unparalleled feeling. Once you’ve figured out what suits your lifestyle, it’ll be smooth sailing from there.
We have put together a few personal finance tips that you could follow right from the beginning to improve the state of your finances.
Maintain a Tracker
As a student, your expenses may be limited to a handful of items such as tuition, accommodation, conveyance, food, phone bill, the occasional shopping spree, and other lifestyle costs. Nevertheless, having a tracker to plan, record, and assess your expenses is more crucial than you’d realize.
Such a record of all your incomes and spends helps you understand not only the cost of living but also how you can allocate funds efficiently.
This tracker could be a physical journal or a spreadsheet file on your computer. It doesn’t have to be too complex. Moreover, maintaining such a tracker of your finances also enables you to plot your financial goals, both short-term and long-term. It can then serve as a basis for your action plan to meet those goals.
Learn About Taxes, Loans, Insurance & Investments
When it comes to finance, there’s quite a bit you need to learn about. In all fairness, that’s because all of it will concern you at some point in time. It’s best to have at least basic knowledge of these topics than to be caught up in a situation where your obliviousness could prove to be a disadvantage.
For the uninitiated, there are ample online resources available for free. Look up YouTube videos that simplify the concept of taxes, loans, and investments. You’ll also find some excellent reading material such as books and infographics for understanding important finance-related concepts.
Even if you only take baby steps, make it a goal to learn something new every week. And ensure that your knowledge also extends to the practice side of things so that you can implement them when needed.
Start Saving Early
The worth of accrued savings is often underestimated. However, gaining a few years on your savings plan could make a massive difference in your future.
So, whether you are fresh out of college or just getting into university, firmly follow a savings rule. It doesn’t matter whether you save $5 or $50 in a month. All you need to be mindful of is saving every extra penny that you possibly can after deducting your essential expenses.
Plan For Passive Streams of Income
Conventionally, a 9 to 5 job is considered the go-to in terms of stability. But these days, people increasingly realize the unutilized potential of having passive streams of income. Some examples of these would be affiliate marketing, creating informational products or templates, monetizing your social media presence, etc.
Ultimately, you ought to learn to make money work for you. That is one of the most common principles/ beliefs in personal finance.
Keep a Check on Your Spending
Even if you are not a spendthrift, student life can sometimes make material things seem far more important than they are. For instance, that 3rd weekly takeout order? Probably not needed. You could, for a fraction of the cost, make a simple meal at home or in your dorm.
When you feel you are about to impulse buy something, take a moment to tune out of that mindset. Asking yourself if it’s truly worth more than the momentary satisfaction you’ll derive is a good way to go about restraining your spending habits.
The more conscious you become of your spending habits now, the more it’ll benefit you lifelong because you’ll have built a knack for controlling your urges and prioritizing what’s important.
Investing your time and effort into understanding personal finance and making the best use of resources available to you is the preliminary pitstop in your journey to financial freedom.
It’s never too late to get started. But as a student, you have the advantage of time. So, tap into it right from this moment.
Learning to manage your finances at a young age will certainly hold you in good stead for life.