Money management, budgeting, and savings may not be your top priorities as a college student. You may want to enjoy a carefree life and have fun while getting an education.
However, making some financial errors while in college may come to bite you in the future. Here are five money management tips that you may follow, if you are a college student.
1. Develop a monthly budget
Even if your parents are funding your education, it is important to develop a budget and then stick to it. You must determine the various income sources and categorize expenses as necessary and avoidable. It is recommended you develop the budget with the help of your parents to gain from their knowledge and experience. However, parents must remember not to take over the financial control of their college-going child. They must keep a check that you stay on track, but allow you to take charge.
2. Borrow only what is needed
Education loans are easily available from most financial institutions. However, just because these are available does not mean that you borrow without any limitation. Student loans must be used only for necessary spending and not on luxuries or fun-filled activities. Furthermore, you must borrow an amount that is necessary and reduce your burden by repaying the loan whenever you have some extra cash. Although education loan repayment commences after you finish studies, repaying earlier will reduce your burden in the future. In addition, it will also inculcate a habit of savings in you.
3. Save money while in college
As a student, one of your priorities must be to save. One way to achieve this is by investing in mutual funds through Systematic Investment Plans (SIPs). An SIP allows you to invest a small amount at a periodic interval, which helps in wealth creation over the long-term. An important aspect of saving money is to develop discipline, which is easily achieved by investing in SIPs. Moreover, you must save a certain amount to build an emergency fund to meet any unexpected cash requirements. Also, you must delay bigger purchases, such as buying a car or home until you start working and earn a regular and steady income.
4. Be careful about credit card usage
Credit card companies often target college students and entice them with “easy money” offers. It is common that you may be short of funds while in college and card companies take advantage of this situation. You may indulge in unnecessary and avoidable expenses by easily swiping your card for these purchases. However, bear in mind that you need to repay this money. If your credit card bills are huge, you may not have the entire amount and may end up paying only the minimum due amount. This leads to a debt trap with huge finance charges and late fees (in case of delayed payment), which in turn, may create a financial wreck.
5. Work along with your studies
When you work along with your studies, you enjoy several benefits. If you are lucky to find a job within your field, it will help you get a good opportunity when you complete your education. Furthermore, it will help you earn money, which may be used for tuition fees and other expenses incurred during your college education. Remember that the more you earn and save, the lesser you will have to borrow. Moreover, you may consider working full-time and attending part-time college to reduce your expenses and manage your money more efficiently. The work experience you gain during your college education may also help you make a smooth transition from a student life into the real world when you commence your actual career.
Money management is not an easy task. Moreover, it is a continuous process. There are apps will help you efficiently plan your expenses while providing you regular reminders and other updates. As for investing, most college students neither have the experience nor the expertise to start investing. All-in-one money management apps are a huge benefit. They track all your expenses and tell you exactly where you are spending more, let you save up and investment options for a future goal you might have such as repaying your student loans, and even let you start investing in mutual funds right from the app. These apps have brought the power of investing with simple and intuitive interfaces and can help you change your life.