College is a huge step towards a budding future. College gives you a sense of freedom and at the same time, a sense of responsibility is put on your shoulders. As a young adult, you proceed towards having a learning experience whilst making lifetime memories.
Stepping out of the comfort of your house to an unknown territory can be a little daunting for a new responsible adult. School life teaches you a lot of important stuff, but college expands your horizon. Among plenty of new skills which you may need to familiarize yourself with, most important is financial stability.
How To Be Financially Independent
Whether you are paying your way through independent finances, getting your parent’s help, dependent on a financial institution or all three of them are your pillars, college can prove to be a learning experience or a fatal accident.
If you are wondering ‘why is college important?’ The answer is simple because it prepares you for the real world. Out of many things that you will learn, financial management is one of the most important skills that you will acquire. If the debt is not managed well, you will face a lot of hardships trying to settle your debts instead of having fulfilling young adulthood.
Stick to a detailed budget
Children who are spoilt for choices, do not understand the issues involved with a lack of making informed decisions. They end up living off of their parent’s generosity or incur huge debts throughout their college life. They, later on, spend their lives earning money just to pay off these huge debts.
Before anything else, carefully plan your financial budget keeping all important things in mind. Whether it’s income from a part-time job, or parents, or a financial institution, categorize these aids in a carefully laid down path.
Track your expenses
Make a clear picture in your head, as to what expenses you need to cover. After a few failed attempts, you will become more confident. Regularly monitor the progress you have made. Track your expenses as to where you have spent and how much. Be more effective in budget cuts and spending on the most necessary of items.
Sticking to a budget is trickier than making a budget. Fine-tune your budget by putting it on paper, which helps in making it look more realistic.
Open an Account
Develop a healthy habit of opening a savings bank account, early on. Most people struggle to stay afloat because they don’t cultivate the habits necessary for survival.
In the words of Warren Buffet, “Do not save what is left over after spending, but spend what is left over after saving.” Spending first and saving, later on, seems too tempting to resist. But its consequences can be felt later in life. Having your budget in one place can help you identify the problematic areas you need to work on and do better.
Identify your Financial Goals
Planning a future needs commitment and inspiration. You need to identify what it is you aspire to be in your future. Having a set target can help you understand how much money you need, to achieve that target of yours. Make goals that are realistic and achievable. Most people like to have enough money to do whatever they want in life. Think about what matters to you, and how you envision your future to be.
Build an emergency fund, however small
Life is full of uncertain events. No one knows what’s going to happen, so it’s important to keep some money aside from the beginning for such uncertainties. That extra money you have, which you think of spending sometimes. Don’t. Keep a vigilant check on your spending limit. This fund you set aside today will help you in future emergencies.
With time, getting old is natural. Thus, this emergency fund can go a long way in helping you come out of tough times. If you have an extra amount tucked together, you won’t have to ask for loans or depend on others in perilous times. It will be your support. Saving for some big purchases can be a good way of cultivating a saving habit and limiting yourself, which helps develop discipline.
Manage Student Debt
Loans from any kind of institution do look like easy money in the beginning. But with higher interest rates, penalties, and other issues, it can spiral out of control easily. Books, tuition, food, housing, and other expenses are quick to add to your worries. Be cautious while applying for a loan, search for lower interest rates, have a lookout for a reliable bank. If you are thinking of applying for a debit card, be sure that your bank doesn’t allow large overdrafts.
Instead of buying new books, one can always opt for second-hand used books. Exercise your body by not renting a car, and cycling or walking to your campus. Consider switching to less expensive meals so have more savings.
There can be needs that can always be funded with the help of a part-time job. A part-time job should be well thought of. It should not take much of your commuting time. Off-campus positions pay more, while work-study positions available on the campus itself offer flexibility with location ease.
Having a part-time job can be exciting, but it shouldn’t deter you from your main goal, which is being an academic and studying. Time management becomes a crucial part of your life when you are trying to juggle work-life balance.
As you enter new and uncharted territory, you have a lot to look forward to. As you step into adulthood, you tend to understand the responsibilities that you shoulder in this new phase of life. As people, everybody is different and their personality traits reflect what position they hold in life.
You have to be firm and stand your ground in changing circumstances. People are not able to fully grasp the consequences of spending recklessly without having any savings. Having the ability to look at the bigger picture proves efficient in this scenario.
Like many other things in life, budgeting and saving are skills that are potent to lead a comfortable life ahead. It takes time to develop these habits, so if you tend to go over budget or don’t panic. Begin again and try till you succeed in your efforts. Focus on building healthy financial habits that will serve you well for the years to come.