Managing your hard-earned money as a working student can be tricky. Plus, many distractions like online shopping and other temptations can derail you from your goals. This is why knowing how to handle your funds and taking control of your finances are essential in creating a solid financial foundation. It can also help you avoid making wrong decisions that may impact your future.
Financial management is a skill that can benefit you not only during your college years but throughout your adult life. With the right mindset and attitude towards money, you can grow your savings and avoid getting into debt.
We’ve rounded up some practical ways to help you manage your finances, whether you’re expecting your first paycheck or receiving your nth salary.
1. Create a budget
A budget is your roadmap to managing your finances efficiently. The key is to know the difference between needs and wants.
If you set and follow a realistic budget, you can avoid spending on things that aren’t within your means. Unnecessary expenses can lead to missing loan payments, or worse, incurring credit card debt.
Here are some tips for successful budgeting.
- List your net income, any allowances you receive, and savings.
- Enumerate all your estimated expenses, which may include the following:
- School supplies
- Books
- Food and meal plans
- Personal care items
- Laundry
- Rent/housing fees
- Leisure activities
- Mobile phone and other bills
- Student loan payments
- Gas and car maintenance (if applicable)
- Be realistic about your budget. For example, when listing down your food budget, consider expenses outside of the usual breakfast, lunch, and dinner. Take into account snacks, water, and other pantry supplies.
- It’s okay to include expenses for leisure activities. You’re working hard and deserve to relax and get rewarded for your hard work.
- Try using a budgeting app or create a spreadsheet for tracking your expenses so you can access your budget anytime. These tools can also help you make easy and accurate computations.
- Don’t forget to adjust your budget from time to time. It will help if you factor in price changes in the products and services you usually buy. On the other hand, remember to add your extra income, if any.
2. Determine your financial goals
Having a goal can be truly motivating. Setting your financial goals will help you make sound decisions about how you’ll spend your money. Your goals don’t have to be grand. It can be as simple as saving up for a new laptop or running shoes.
As you reach one milestone after the other, you’ll get more confident about setting bigger goals. These may include investing, purchasing a car, or saving for a trip abroad.
Here are some tips to help you get started with your financial plan.
- Write your goals down. It doesn’t matter if you think they’re too big or small. When you’re done, identify which ones matter most to help prioritize your goals.
- Group your goals into short-term and long-term. This practice will allow you to make reasonable timelines for each one.
- Use the classic yet very effective SMART (smart, measurable, achievable, relevant, and timely) strategy.
3. Understand your student loan options
Student loan debt is one of the biggest financial challenges college students face. Your student loans have an impact on your credit score even after you graduate. The length of credit and payment history contribute to calculating your scores.
Here are some ways to help you keep your student loans in check:
- Learn about various loan options to know which one fits your needs. You may ask your school’s financial aid office for guidance on this matter.
- When choosing a student loan program, consider the interest and payment terms to see how you can fit it into your budget.
- Assess how much debt from student loans you will owe until graduation. Try to come up with a plan to pay them before they’re due to avoid bad credit and increase your credit score.
4. Remember to pay yourself first
Saving money is a skill that you need to practice early on in your adult life. It will help you reach your financial goals and provide you with an emergency fund.
Check out the tips below on how you can start saving your income as a working student:
- Open a savings or emergency fund account. Every time you receive your paycheck, immediately deposit a fixed amount to this account.
- It doesn’t matter if you start small. The important thing is being consistent in your saving habits. You can always deposit more money when you can.
- If you still have money left after settling your fixed expenses, no matter how big or small, add it to your savings fund.
Manage Your Finances the Smart Way
Managing your money as early as now is an excellent training ground that prepares you for your future. Being a working student is not easy, so you owe it to yourself to handle your money responsibly. Budgeting, setting your goals, saving, and maintaining a good credit score can provide you a headstart to a bright financial future.