College is one of the best times of your life: you’re always meeting new people, are regularly exposed to new and revolutionary ideas, and will make memories that last a lifetime.
However, college can also be challenging. As a student, you’re continuously juggling responsibilities and are constantly aware of the costs like school fees, books, food, and accommodation.
These responsibilities can lead many to put their head in the sand during their college years and ignore their finances. But this approach is unlikely to alleviate any financial anxiety you might feel and will only inflate your debts when you graduate.
Instead, try a forward-thinking approach to budgets, expenses, and income — here are a few tips to help you along the way.
Setting-up Your Budget
First things first – you can’t address your finances properly without a clear budget.
You can create a realistic budget by adding up your income and looking at your expenses. This can be tricky, especially if you work hourly, which might fluctuate around seasonal shifts and finals and your income is inconsistent. You can account for these fluctuations ahead of time or should set a “minimum income” amount, so you don’t reach beyond your means.
Next, divide your expenses into essential and non-essential expenses. Essential expenses should cover any non-negotiable fees like rent or food, and non-essential expenses should include cash for good times (we’ll get to that later!).
Once you have a clear picture of how much you expect to earn and spend every month, you should start to think about how you can make your money work for you through investments and interest on savings — but only after you’ve established a healthy emergency fund.
An emergency fund protects you from unexpected medical bills or car maintenance fees. This isn’t the most fun way to handle your money, but it’s essential if you wish to have financial security and peace of mind. Emergencies can happen anytime, and being prepared for the unexpected ensures you will be okay.
Determining the size of your emergency fund depends on your current financial situation. However, an excellent point to start is budgeting to cover at least three months’ worth of expenses if you lose your source of income or are hit with an unexpected bill.
Without proper care and attention, cars can be money pits. You can easily spend hundreds, if not thousands, on simple repairs, and cars require consistent tax and insurance payments. As a student, you should seriously consider ditching a car until you have a reliable full-time income source that can support your vehicle without putting an extra strain on your budget.
It’s hard to know if life without a car is right for you, and you should consider factors like your proximity to campus and access to public transport before you list your vehicle on craigslist. However, there are profound health benefits to going without a car, as you’ll likely cycle or walk far more than you ever did before.
A budget isn’t a spreadsheet that exists to make you feel guilty. A reasonable budget should allow for small fund to allow traveling, eating out, shopping, and activities with your friends. It’s important to set some money aside to for good times and memorable experiences, but as long as it doesn’t put you in a hard spot. You need to remember that your budget every month may not allow for fun activities if you
As a student with fewer commitments, you should seriously consider spending the money you budget for good times on summer travel plans. Summer vacation will help you see the light at the end of the spring semester tunnel and will give you a chance to make meaningful connections with the people you’ve met while studying.
You can’t achieve financial independence overnight, but that shouldn’t stop you from making proactive financial choices based on a clear budget and some forward-thinking. That might mean you need to ditch the car for a few years, but it will also allow you to spend a little extra on summer vacations or road trips with your new friends.