With the new college year around the corner, students will be enjoying their first taste of independence over the next few weeks. But according to new research, one in every 5 students is likely to face financial difficulty sooner or later. (CitizenNews, 2014)
For many students leaving home for the first time, university life is seemingly highlighted with excitement. It is also a time when they have to make a number of unfamiliar financial decisions. Generally, students may feel that they lack sufficient information and experience in financial management, resulting in them being more likely to make mistakes that can have repercussions for years to come. In extreme cases it may even force them out of university.
Below, we have put together a few basic guidelines for new students to help manage their daily finances:
Set a budget – and stick to it!
The costs of books and supplies, living expenses and travel to and from school can get expensive as each academic year passes. It is advised to determine a figure of your spending outside of the tuition costs before the beginning of each semester. Include savings you plan to use, any money you may receive from your family and the income you can expect from any jobs.
Each semester usually last about four months. Divide your projected total to determine your monthly expenditure after deducting the amount for books and stationery at the beginning of the semester. It’s also commendable to track your actual spending throughout the semester, so that you can more accurately project and adjust your budget for the remaining course.
Prioritize your needs
Once you know your income, determine a list of expected expenditures each month. Purchase items you need and if there is not much left avoid spending on things that are not necessary. Textbooks, food and living expenses fall under the category of needs, but weekend trips, nights out and new clothes can be curbed if they need to be. Even owning a car for commuting can drain your limited resources.
Maintain a list of all the purchases for the month; carefully examine them by dividing them into categories. By individually adding each category, you will be able to monitor if you’re spending as much on morning coffee as you are on weekend entertainment. This enables you to control those categories that consume a larger part of your expenses, helping you to reconsider your spending choices. If you’re honest about your real necessities, it will be easier to create a workable budget, and find ways to save.
Avoid credit card debt
The importance of budgeting is clear when you see the consequences of spending beyond your means. Many students rely on credit cards to stretch their spending money, but given the high interest rates involved, that can be a costly choice. Most students end up paying off their accrued bills after graduating, as well as having to paying off outstanding student loans.
Debt would restrict you from finding an affordable house to live in or to qualify for an auto or other loan. If you’re going to reach for the plastic, make sure it’s a debit card. That way you will spend only what you have in your bank account now and avoid overextending yourself.
University doesn’t have to be a financial struggle if you are careful with your purchases. That high-end cross-body bag or the latest smartphone can take a back-seat until you save enough cash to pay off your 2 month credit card bill. The faster you pay them off, the easier it would be for you to get them later.
CitizenNews, 2014, Student money worries? Top tips for financial survival at university, Gloucester Citizen, viewed 30 September 2014, <http://www.gloucestercitizen.co.uk/Student-money-worries-tips-financial-survival/story-22967416-detail/story.html#ixzz3EzDqJeVH>.