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Back when I was in college, I probably used the phrase, “Sorry, I’m broke” on an unhealthily regular basis. To be honest, I wasn’t really “broke”, but I definitely did not have extra money to spend on things I’d like to spend on.
It was in my sophomore year — when my friends decided to plan a spring break trip to Florida that I didn’t want to miss out on — that I decided to get my finances in order. After the initial speed bumps, managing my money became a habit, one that held me in good stead throughout the rest of my college years as continues to be useful even today.
Here are a few tips to help you get your finances in order, so that you too can manage your money in an easy and effective manner.
Learn to Budget
Budgeting is the key to keeping track of your money. In fact, budgeting is one of the easiest ways to start saving money. When you are able to successfully budget, you will always know where your money is going, and how much you have left over in case of unplanned spending. To get started, keep a note of all your expenses for about a month or so.
Write down everything, from buying yourself a coffee to paying a recurring phone bill. After a month, you will be able to see where most of your spending occurs, and thus create a budget based on the same. After you get a good idea of how much you spend within a fixed interval, say every month, you can compare your expenses to your income.
Then, after noting down where you can cut expenses, and where you absolutely can’t, you can create a monthly budget.
It’s important to create a budget based on what you actually spend rather than assigning arbitrary numbers thinking about what you wished your budget would be. Doing the latter leads to a higher chance of failing when it comes to sticking to your budget.
Budgeting apps like Mint are extremely helpful when it comes to being able to access your budget anytime. One thing to remember while creating a budget is to always allocate an amount for miscellaneous expenses that don’t fit into your regular spending.
Whether your use this amount is immaterial, however, in case you experience a period of necessary high spending (say, buying new textbooks or even going on an expensive date) then this amount will come in handy.
It’s always good to a goal in terms of your money. As I said before, my goal that got me on the money management wagon was going on a trip for spring break.
Having a goal kept me motivated, and ensured that I tried my very best to stick my budget, not giving into random urges to spend on unnecessary things. If you have a goal that is in the near future, then set aside a small amount of your paycheck/allowance each month, towards fulfilling this goal. At first, this seems tedious and unnecessary, but soon, setting aside a portion of your income will become a force of habit.
When your funds start building up, you will see the value in having set aside those small amounts and be extremely grateful!
I opened a savings account in college, in which I’d put another portion of my monthly paycheck based on what I could afford. Even if this amount is a meager $10 dollars a month, getting into the habit of having savings is very important.
Over time, your savings will accumulate, earn interest, and come in handy on a rainy day. In a particular month, if you spend less than your budget allows for, then make sure to put the remainder into your savings account rather than splurge and spend it all away. This way, you’ll see more growth in your savings account over time.
Other ways to save include making changes in your daily habits. For example, if you spend a lot of money on your car, consider learning some auto-hacks, in terms of gas savings, or fixing basic car problems so as to save you unnecessary spending on trips to the mechanic.
Personally, I ended up saving a sufficient amount of money by simply waking up a little earlier so that I had time to make a cup of coffee before running off to my early morning classes, rather than buying one every day on my way. At first it doesn’t seem like much, but these changes in your daily routine do add up!
To increase your savings, you can also consider avenues to gain supplemental income. In today’s world, the internet allows people to work remotely and from various locations more than ever before. According to this infographic, 61% of American homes had wifi in 2012 (when I was a sophomore in college).
Since then, the number has only gone up and with increased connectivity comes increased opportunity. Use opportunities on the internet, like writing for blogs that will pay you, or taking surveys for money to boost your income.
These money-making opportunities don’t require you to travel far, and can often make you some quick cash without too much of your time being spent.
Plan for the Long term
It’s always good to keep the bigger picture in mind. Some of the basics of long-term planning include having a savings account, a retirement and pension plan, and long term insurance. For example, if you know you would like to retire abroad, then factoring this into your goals is essential, as research shows that retiring abroad can be quite costly.
Thus when following through with the required actions to achieve your goals, you’ll want to keep this in mind. I know it’s hard to think of the bigger picture at a young age, but it’s safer to plan sooner rather than later.
Even if you are not in a position to actively take steps to plan for the long term, keep these thoughts at the back of your mind so that when the time arises, you will be well prepared. Long term planning can be tedious and take up a sufficient amount of time, but it does let you reap continuous benefits.
I hope these tips help you get your finances in order. After taking that first step, you’ll see that money management isn’t as hard as it seems, and before you know it, you’ll be managing your money like a boss!