Money Management
September 5, 2019
If you’re like me, being a college student and having money do not go hand in hand. Money is hard to come by, especially with high tuition prices, car payments, or even having friend groups who like eating out every weekend. Random costs even seem to creep up and we have no idea how to pay for them. It’s even hard to look at your bank account sometimes without stressing about your financial standing. So, where is the silver lining in all of this?
Kathy Caprino of Forbes Magazine writes an article on how college students can be more “financially literate.” Caprino gives seven steps to building better financial stability as a college student. These are extremely simple to understand, and almost every student should be able to achieve these. The most important point I believe Caprino makes is creating a personal budget for yourself. This will lead to a better understanding of financial literacy, which will, in turn, make things easier on the average college student.
Building a personal budget does not take long. I have hands-on experience in not only building my personal budget, but also budgets for friends and family as well. There are three basic categories when it comes to building a budget: figure out your monthly income, decipher all your expenses, and put aside money for future savings. The bottom line is that becoming financially literate is one of the most important objectives as a college student. It doesn’t just affect your current situation; it will continue to be relevant for the rest of your life. This takes patience, discipline, and a desire to plan for a financially stable future.
Whether you have an hourly job or a base salary, your monthly income should be the first step in your financial management. You probably work hard at your job and want to be rewarded with a paycheck at the end of the week. The question is, how do you want to use that paycheck? The next step will allow you to understand the significance of your paycheck and how to disburse it correctly.
Thinking through all your expenses is the next and probably most essential step in becoming financially literate. Personal expenses can include car insurance payments, gas, going out for dinner, etc. This is where you determine what costs are useful to your everyday life, as well as where you figure out costs that can be cut. Important costs to consider are miscellaneous spending, which are costs that are not imperative (unlike car payments or insurance). A great rule to follow is to consider needs over wants. It may be tempting as a college student to go on a shopping spree for the latest styles, go out to eat multiple times a week, or even buy every new iPhone as it’s released. There’s nothing wrong with a splurge occasionally, just if needs are placed above wants. The US News reflects on this very idea. They warn students that they need to budget for travel, food outside of the regular meal plan, and any other extracurricular activities they desire to do in addition to the normal university expenses. College is already expensive, why make it harder by not budgeting for those extra expenses?
Saving can be the most difficult step to follow when it comes to financial management as a college student. We have always been warned to save as much as we can, but it never seems to happen. After seeing your monthly income and figuring out your expenses, take a percentage of the difference and place it into a savings account. Putting away a percentage of your paycheck is a great step in the right direction. Once you get into the habit of saving, your financial management becomes a lot easier and will prepare you for the future. The Balance, an online financial blog, looks at savings differently for college students to regular adults. College students should not look to invest their money into other entities, but rather save for future tuition payments, books, or a financial desire of the student. Saving is extremely important for the success of a college student’s financial management. Without additional funds, you will run out eventually and become stuck in the financial rut that many college students find themselves in today.
I understand that spending money is a part of going to college. You want to have fun and get the whole “college experience.” Budgeting is hard when there are so many areas where money can be spent. However, it is important to budget for this spending, as it can easily get out of hand and will leave you wondering where your money went. Stay disciplined, stay responsible, and stick with your budget as it will allow you to have a more financially stable present and future.
Sources
https://www.thebalance.com/managing-your-money-while-in-college-2385965
Written by: Mike Tammaro
Mike is a Junior double majoring in Finance and Economics and writes for the blog in order to expand my skills as a student. As a business major, the curriculum does not allow for a lot of creative writing, so being able to publish written work is freeing from my normal educational routine.