5 Essential money management skills for students
The school and college experience is romanticized in every form of media. From movies to books, the idea of studying at an institution is often seen as an experience without struggle, without managing resources, time and money. While student life is a whirlwind of new experiences, it also means juggling limited resources. Worry not, today’s article has got you covered! This article will explore the most essential money management skills for students.
1 - Understanding your finances
Amidst the never-ending run for academic validation and the late-night pizza talks lies an important skill that could determine the trajectory of your life: financial literacy. As the name suggests, financial literacy is everything that has to do with finance- setting realistic financial goals, maintaining an expense journal- and so on.
The best way to understand your finances is by maintaining a viewable record of the times you've spent your money. It's best to commit to the process without being harsh on yourself. Instead, be honest.
If you were looking to save up as much as possible and yet, gave into temptation- forgive yourself. Writing all your expenses down helps you reflect on your spending habits.
And reflection is the first step to building an empire!
2- Beware of impulse purchase
Impulse purchases are a necessary evil. Maybe it's the instant relief and gratification you get while splurging on a bag or the crippling guilt that sinks in late at night while you lay uncomfortably in your bed and your bag sits comfortably atop your closet.
Maybe it's both.
Simply put, an impulse purchase is one you make on the spur of the moment- no conscious thinking. How do you make up for it? Again, simply put, there is no making-up. Instead, treat every purchase as an opportunity to identify the common patterns in your spending habits.
Remember that little scenario I drew up at the start of this paragraph? Fun fact: that late-night guilty feeling related to a purchase looming over your head has a term to it. It's called buyer's remorse!
A few questions to ask yourself to prevent buyer's remorse from infiltrating your consciousness include:
- Will this purchase leave me strapped for cash for necessities later?
- Is this purchase fulfilling a long-term need of mine?
- Is this a sudden urge, or have I contemplated buying this for a long time?
- Will I regret this purchase later?
The last question is the most important one. A rule of thumb financial experts swear by is sleeping on the decision. Giving yourself at least twenty-four hours before making that purchase allows you to assess the positives and negatives of spending!
3 - Setting financial goals
At the end of the day, the most important money management skill you'll learn is the art of goal setting. More specifically, financial goal setting.
Financial goals are targets that keep you motivated in the long run and help keep your finances in order. To get you started, some solid financial goals for students can include applying for financial aid, planning to pay off student loans sustainably and opening a savings account.
However, the “best” financial goal is the one that bridges the gap between your current lifestyle and your desired lifestyle.
Setting financial goals includes taking into account your current financial state and your dream financial state. This could be making a liveable income from your business, not having to worry about retirement- it's all up to you! It's important to remember that there isn't one “right” financial goal. While personal finance in itself is extremely dependent on every individual's unique financial situation, financial goal setting is even more so.
4 - Saving up for the big day!
Saving up money for a big purchase in the future involves the exercise of willpower and a bit of restraint. However, this has earned the term the negative connotation of being an excuse for frugality. The truth is, there's a lot more to saving than frugality.
Not all your savings need to be emotionally charged dollar bills desperately stuffed under your mattress. As a student, you must be creative with the way you save. Do you have clothes, textbooks, or items you no longer use?
It's essential to review the terms and conditions to make yourself aware of any terms or limitations.
5 - Exploring financial aid
The biggest mountain to climb, besides maintaining good grades and a sleep schedule, is the towering mountain of college loans. Financial aid comes in the form of grants, scholarships, federal loans, and work-study programs.
Federal Pell Grant, for example, is a grant wherein free money is awarded based on financial need and academic merit. Many universities and states offer their own grants. In a similar format to the grant, scholarships are awarded based on excellence or involvement in specific programs like academics and athletics. National scholarship databases are a good source to look at.
Work-study programs allow you to gain valuable work experience while still finishing your education. These programs allow you to earn money through part-time jobs on campus or with approved employers. While grants and scholarships involve no repayment, federal loans do. A plus point is that these typically involve lower interest rates than private loans.
Along with these options, private organizations like corporations, foundations, and associations hand out scholarships depending on the area of experience. Scholarship search engines and databases are key tools to help find scholarships for students.
By being proactive in your quest for money management and being consistent with your work, you can easily reach your financial goals. Good luck on your journey with money management!
This article was originally published in The Teen Magazine