Managing personal finance is one of the most challenging tasks in our lives. The earlier you learn to manage your finance, the better you will get with making sound financial decisions in the future. While managing money at the high school level is not a good idea, at university is an ideal place where young students can learn to manage their finances.
Why Should You Manage your Finances at University?
As a student transitioning from high school to university, you become more independent. A number of students even travel across countries or to new cities to attend the university. This gives a great chance for any student to make their own personal financial decisions and manage all their money by themselves.
Thus, it becomes extremely important for university students to develop good money management habits at an early stage. These money management habits will also help you to make smart financial choices and will assist you in building a strong financial foundation for your future.
Additionally, these financial skills developed at university level will help you to effectively manage income, expenses, savings and investments even after university. To help you start managing your money efficiently, here are five personal finance tips that will guide you to smoothly navigate through the most challenging parts of your university life.
Plan your financial strategy
Plan your financial strategy even before you start university. If you are going to attend a university in a new city then list down all your potential expenses such as tuition fee, books, food, rent, airfare, etc.
If you are considering taking a student loan, then also add this to your strategy. This will help you in saving money to repay the loan after university. While attending university will be the main purpose of you moving to a new place, make some arrangements in your financial strategy for recreational activities such as going out with friends, attending events or watching movies.
The more transparent you are with yourself and your parents, the more you will be thoughtful in making your financial strategy. To get a practical idea of the real-world expenses, talk to your parents and learn from their experiences. Get a basic knowledge of routine expenses such as the grocery costs and the utility bills and see how your parents manage them.
Your parents can act as the first financial mentors of your lives and teach you the basic principles of financial management. Additionally, you can reach out to your cousins or friends who are already attending university to get a clear idea of all the university expenses.
Make a budget
A budget is important to make sure you do not struggle to figure out your financial priorities. As you start making a budget, you will understand the difference between necessary expenses and unnecessary expenditures.
For example, paying the tuition fee, utility bills and rent are things which you cannot avoid, whereas buying that extra pair of shoes or going to university in a cab instead of using public transport are some of the expenditures which can be avoided.
To create a budget start by listing down your income such as the money you get from your parents or through your part-time job. Next list down your expenses including everything from books to rent and food to the tuition fee. Finally, keep some space for the funds which you can save or spend on yourself. As you start tracking your income and expenses, you will get a clear idea of your monthly cash flow and the ways you can implement to enhance your cash flow.
Build a saving account
While it might be tempting to spend all your pocket money during university, keeping some money aside for the rainy days can make you financially secure. So, instead of giving in to the social pressure and spending money beyond your means, develop a habit to carefully build up your savings account.
Consider paying in your savings first before spending money on anything else. As you will start giving priority to your savings account, you will keep yourself away from unnecessary expenses and will save a decent amount of money. This money will come to aid in case you need an emergency fund or are running short of money to pay your student loan or to start a start-up after university.
Avoid credit cards
With the easy availability of credit cards for students, it has become very common for university students to accumulate credit card debt before finishing university. While keeping a credit card for emergency expenses is a good idea, students should limit their number of credit card accounts.
Also, if you already have a credit card then make sure to use it wisely and always pay the full balance every month. If you are planning to take a credit card, then choose the one with no annual fee and a lesser interest rate.
Additionally, keeping a credit card might tempt you to spend money on expensive purchases. However, these purchases can prove to be unfruitful in the future and might also increase your credit card debt. So, try to avoid splurging on unnecessary spending with your credit card.
Finance tuition the right way
One of the greatest mistakes university students make is lending surplus money for their tuition fees than the actual requirement. Student loans usually come at high-interest rates. This makes it difficult to pay off the loans after graduating from the university.
Before applying for a student loan, check if you are eligible for any grants or scholarships. While grants and scholarships might not cover your entire university costs, you can still save a good amount of money. As scholarships and grants do not have to be paid back, you can use this money to pay off your student loan or lower your loan amount.
Experts suggest before applying to university and taking a student loan, check for which financial aids programs you can qualify for. Accordingly, plan your tuition fees strategy and save yourself from taking unnecessary loans.
In conclusion, university is an excellent time to start financially planning and getting practice in managing your money for the future. You will not regret the will effort you put into managing your persona finance as a university student so that you can make better choices about where you spend, save and budget yourself.