When you are young, sometimes, sorting out your finances is the last thing on your mind. The general belief is that you have no money, and therefore there is nothing to be managed. However, what time is better for learning how to handle this scarce resource than when it is relatively scarce. Don’t let student loans fool you into complacency. Learn to take care of your finances and live within your means now, and you will most probably have a much easier life when you leave school.
The importance of learning and implementing sound financial habits early cannot be overstated. If you want to learn about why you should exercise healthy money habits, consider asking one of the writers from a write my essay service to write a paper on the topic for you. Therefore, rather than convince you why you should do it, here are five money guidelines that you should consider implementing in your life.
Get A Financial Education
Learn about the various aspects of financial management. Learn about everything from how student loans are calculated and earn profits to how to invest in real estate. Even if you may not need all that information at that time, learning about it will not hurt you. You will move forward in life equipped with knowledge on all the essential things in financial management. As an added bonus, also learn about investing and savings. Finally, always remember the compound rule.
Track Your Spending
You cannot control what you cannot measure. If you find yourself in debt or broke at the end of every month, it may be time to evaluate how you are spending. Many people will suggest getting a budget, but unless you identify the leaks in your bucket, no amount of rationing will prevent the water from seeping through the holes. For a set period, spend as you usually do. At the end of every day, use an app or a spreadsheet to note down all your expenses.
Make A Budget
When you know where your money goes every month, it is time to make a budget. To start, you may separate your wants from your needs. Expenses like food, clothing, rent, utilities, and healthcare will fall under the needs category. Others like partying, junk food, and cable TV are enjoyable, but they are not needs. You may have noticed that food is a want, but junk food is a need. That is not coincidental. The goal of budgeting is to reduce your expenses as much as possible. It may mean that you cook more and eat out less. It may mean that you cut down on your party expenses and shopping.
When making your budget, start by adding the needs. Sum up the total expected and subtract this value from how much money you have at the beginning of each month. After removing your savings (more on this in a bit), decide which needs you don’t want to live without and which ones you probably should. A budget lets you know how much you have available to spend each month so that you do not exceed your limit and have to suffer at the end of every month. Eventually, you will get used to living within your means, which will mean that you have lower chances of going into debt because of your financial habits.
When you have no kids whose futures you are saving for and an allowance every month, it may not make sense why you need to save. Savings are great for rainy days, for clearing debt, or for buying yourself the latest smartphone instead of asking your parents to. This is not to imply that your savings should always be for some designated purpose. There are many savings criteria around. One of the best ones is the 10% savings rule. This rule requires you to save 10% of your gross income every time it comes in. You can call it your emergency fund, a retirement account, or whatever name you want.
This number in the rule is not set in stone. Some months you may be able to save more, and you may save less in others. The goal is to save every month. One way you can do that is to organize with your bank to send this percentage to your bank automatically whenever money comes into your checking account. Additionally, remember that it is easier to save before you spend than to save what remains.
Take Advantage Of Any Available Discounts
Many discounts are offered to students as long as they have their student ID. Take advantage of these discounts. For example, some premium applications have discounts for students. Additionally, you can save on textbooks by choosing to take them on loan instead of buying new ones every month. Look at any institutions, from movie theatres to restaurants with student discounts, and take advantage of them.
A habit, once learned, becomes almost automatic when you grow older. There is no better time to set yourself up but ingraining good money habits than when you are still a student. If you do this correctly, your older self will thank you.