No matter how excellent your grades are, you can't avoid the fact that there are things in life that money cannot buy. There will be times when you need to spend more than what you've got, which is why it's important to know what to do with your finances as a university student. Read this contributed post for some tips on managing your money, even if you aren't making that much...and believe me...if you can manage your money on a student's income, then you're setting yourself up for success in the long term!
Tracking Your Spending Is Vital
Budgets (or I like to just say tracking) is vital for any student. They're a way to keep track of your income and spending. You should be able to see how much you have coming in and how much you're spending. They also help with saving up for future purchases, such as a car or a house! And if you're not sure where to start, there's an app for that! Budgeting apps like Mint make it easy to manage your finances to avoid overspending or getting stuck with large payments.
Track Your Expenses
It's essential to track your expenses so you know where all of your money is going. If you're not sure how to do this, here are some tips:
- Track your income
- Record all of your regular expenditures eg, food bills, etc
- Markdown the frequency of large purchases such as new textbooks
- Identify the dates of all of your funds, including incomes, student loans, and so on.
Use an app that can keep track of all this information quickly and then appropriate your money to where it needs to be so you can maintain your bills and avoid running out of money.
Work On Your Credit Score
One of the most important things you can do with your finances as a university student is to work on your credit score. You will need this score to buy a car or rent an apartment one day, so it's worth taking the time to maintain and improve it. You can start building your credit by getting a secured credit card. Secured cards require you to put down a deposit upfront, which helps make you more responsible. When you use this card responsibly, your credit will improve over time.
However, I want you to really make sure you are not spending too much on the card. Most credit cards have super high interest, and if you have a card with 20% interest, it will take a very long time to pay it off.
Take it from me -- when I was in University, I got my first credit card. I didn't know how to really use it, and I started charging everything. I left school with about $3500 worth of credit card debt, which may not seem like much until you add the interest to it. Then, it takes years to pay it off, especially if your starting salary is low, like mine was.
You Need Emergency Funds
An emergency fund is an amount of money set aside to help you when you're in a tight situation - like when you need a tow truck because your car broke down or when you find out that the glasses you've been wearing for years have broken.
The emergency fund can be used for many things, such as the cost of transferring law school if required. It should be saved up so that it's available if it's needed. The good news is that small amounts can add up over time. If occasional expenses are coming up, tap into your emergency fund until but make sure it is replenished. If there are more considerable expenses, then save up for them by using your emergency fund before taking on debt. Remember, emergencies happen, and the sooner we prepare for them, the better off we will be!
Determine a Debt Repayment Plan
Determining your debt repayment plan is a big part of managing your finances. This is because you won't avoid the possibility of debt when it comes to certain expenses, such as car insurance and cell phone bills.
It's also important to consider where you are financially and where you want to be at the end of school. If that's still in the future, then start saving now so the transition can be more manageable when the time comes. The sooner you start saving; the less drastic those changes will be later on down the road. Remember, even if you don't save, learning how to manage your money, when you have very little will help you to manage your money when you have a lot!