Budgeting for first-year college students is not an easy task. As young people, freshmen have little to no experience managing their money, and what seems to be a great start to the freshman year can soon turn into skyrocketing debt and dissatisfied parents.
If you seem to be losing grip on your financial situation, you may want to learn a few simple rules to guarantee a headache-free semester.
1. Set a budget
Set a budget and stick to it! A college freshman should show extraordinary planning abilities. So use the time management skills you already have and simply pass them onto your budgeting skills. The same way you can learn to plan your schedule, balancing between school life and endless parties, that same way you can plan your money.
The less you spend now, the more you’ll have later on.
2. Be Mindful of Your Expenses
Be aware of the expenses you have. Check out your bank statement, your cash (if you carry any around), and any subscriptions and automated payments you may be making. Sure, Netflix costs around $10 a month, but is it worth paying if you haven’t watched a single episode of “100” for over a month?
Canceling your subscriptions and downgrading your Internet plan will easily save you $500+ every year.
3. Start Saving Early
Every penny saved is twice earned, so start saving and start saving early. Sure, you love Starbucks, but that $5-$10 Frappuccino every morning is going to cost you a fortune by the time you finish your studies. Make a savings plan: it can be round up savings and auto deposits at your local bank, invisible savings, or saving through reducing your expenses. Round up savings plan rounds up your expenditure.
Let’s say you buy a bag of M&Ms for $4.49 – the program rounds up the purchase to $5, and the remaining $.51 goes straight to your savings account. Invisible savings simply mean that you empty your pockets into a jar at the end of the day and forget about it. It is spare change, after all, is it not?
4. Build Your Credit Score
Borrowing some money from your bank and returning it later on does wonders for your credit score, so make sure to build it up while you still can. Borrow small amounts and make sure to return them as soon as you can.
Going beyond the due time can make considerable charges to your credit card. So be careful and plan accordingly.
5. Cook on a Budget
Cooking is such a significant expense in the life of an average freshman. Buying in bulk, buying seasonal products or products close to their expiry date can save you a lot of money. But, of course, cooking at home is going to save you a lot as well.
Make sure to go out, but do not make it a regular habit – those $10 burgers at a local pub are tasty, but a bank statement at the end of the month can make them taste pretty bitter. So plan your meals and shop accordingly, use coupons, online coupons, bulk discounts, and white-brand products.
It does not hurt to be crafty here – it is the same food after all, but the price you pay can make a big difference.
6. Create an Emergency Fund
Freshman or not, nobody is immune to accidents and emergency expenses. A quick trip to the local hospital, a tire that needs replacing, or a laptop that somehow got wet and needs to be fixed happen even to freshmen. These expenses can be covered through the emergency fund, but building one can be an uphill task.
Ideally speaking, your emergency fund should be able to cover a three-months worth of expenses.
7. Plan Your Financial Decisions Around Your Debt
Make a budget that fits your debt as well as your living expenses. It’s not easy balancing between the two but saving enough to be able to at least partly refund your debt is going to do wonders for your finances once you leave college.
Three or four years of study is not a short time to at least partly repay a loan without hurting your budget.
8. Start Investing
A few bucks invested here and there in a long-term, high yield stock can be double beneficial. First, you’ll get early capital gains, and those gains will keep getting bigger and bigger, on average, some 7-10% per year. Furthermore, investing your money into dividend-paying stocks will either pay out a percentage of a dividend every quarter or bring in more of the stock, depending on what you want the payout to be like.
There may be small numbers at the game here, but do not forget about the power of compound interest. The first time you experience money making more money for you, you will be hooked! Of course, do not forget to invest in your education as well: EssayShark can do some of your workloads for you. Make sure to utilize the services you have at your disposal to make your studies a pleasant experience as well, and remember that not delegating some of your tasks can cost you more in the long run.
That is why successful businesses have a good team of people to whom the management can outsource tasks.
9. Test Out Financial Planning Services
There is a myriad of free financial consultation services out there. Make sure to visit them or at least visit their website. Free budget templates, free online consultation, or a blog can all be found for free but can increase your financial literacy. So ask around, and don’t forget that an early bird holds a firm grip over its finances.
10. Get a Part-Time Job
As a student, you may be thinking that you do not have any set-off, particularly valuable skills. But you may be wrong: baristas, waiters, hostesses, etc., are predominantly student jobs. So putting aside a few evenings for your part-time job can do wonders for your financial health long term. After all, who does not want some extra pocket money?
Studies can be a financial trap. Most students end up with a debt that is too high for them to pay it off within a reasonable period. Follow the tips above to make sure you do not end up like this. Do not forget that financial literacy is equally essential for a freshman as it is for an adult. Avoid common money traps and leave within your means to secure a better today and a better tomorrow for yourself.