IN SIMPLE words, personal finance is the process of planning and managing own money transactions. This can include managing income generation streams, money-saving mechanisms and expenditures. Personal finance management is a very important skill to have for everyone, especially for students. The earlier a student begins managing their personal finances effectively, the better their financial health. This will allow them to be in control of their money and meet all their monetary obligations easily and effectively.
Students often have education loans to repay. They also have many student expenses to keep track of, including rent, living expenses, purchase of textbooks, and money spent on their extracurriculars. It is easy to lose track of where money is disappearing at the end of the month if students are not careful. In this article, we shall discuss some of the most efficient personal finance management tips and tricks for students.
- Budget your expenditure every month
Budgeting is an extremely important aspect of personal finance management. Budgeting allows you to understand exactly where your money is being spent on a monthly basis. For students, budgeting will also help them keep track of areas where they spend more and where they spend less. This will help them cut down on their expenditure if needed. Students can budget their monthly income based on their needs. They can budget some money to spend on the best essay services to help them write their college assignments or choose to spend extra money on hiring a cleaning service and cutting down on the budget they allocate for eating out.
- Open a savings account
It is always a good idea to keep your money in the bank. This is primarily because when students have cash on hand, they might feel tempted to spend it immediately. In a saving account, the money is less accessible to them, and they can save more. Another advantage of using a savings bank account is that all credit and debit transactions will be automatically recorded and reflected in your bank statement. This way, a student can always refer to their bank statement to see where they have spent money. If they spend cash, they will not have this visibility.
- Start a monthly investment plan
Putting aside a small amount of money each month is a brilliant way to develop a saving habit. Working this habit into a student’s financial plan will allow a student to lay a strong financial foundation for their future. Saving this money by investing it in monthly investment plans will additionally ensure that you earn a nominal interest on your money. Many people invest late (either in their late 20s or early 30s). If a student starts investing early in their life, even if they invest only small amounts of money, they will be able to accrue larger interests with ease.
- Carefully build a credit
There are many myths surrounding using credit cards. Credit cards are not a source of free money. On the contrary, we should consider credit cards as agencies we can take temporary loans from. Credit cards will allow you to spend credit money and pay your bill at the end of the month. You must wonder what the advantage of a credit card must be in such a case. Credit cards will help you build credit. A high credit score will enable you to take higher loans at lower interest rates. You will also get cashback offers for your purchases.
- Avoid buying new every time
There is no shame in buying things second-hand. Buying new things can be expensive for many. Students can buy almost anything second-hand. This includes textbooks, a car for commuting, seasonal clothes, furniture for your dorm rooms, and more. All these items can be bought via thrifting. Buying things second-hand not only helps students save money but also prolongs the life of commodities and reduces the environmental impact of waste generation.
A Few Concluding Thoughts
It is never too late to learn personal finance management. It is an essential skill for everyone, especially students. Learning this skill will surely set them up for future financial success. Moreover, a student who masters finance management at such an early age will find it immensely easy later on in life when bills and other financial obligations come up. We hope this article could give students an insight into how they can manage their personal finances and save more money for a comfortable and prosperous future.
About the Author
Ruby Butz is a personal finance manager. She makes a living by helping students and young professionals to build a safe and diverse portfolio of stocks to secure their financial futures. Her vision is to provide students with a sound foundation in money management, a skill many youngsters often neglect in the current day and age. Ruby likes sharing her tips in blog articles.