When it comes to students and finances, the situations they choose to spend money in are often far more plentiful than the opportunities they may have to save money. Like any major life change, college comes with its own set of new lessons to learn. for some, there’s no more critical lesson to learn than understanding how to get the most out of their finances and learning to consider spending habits.
Being financially conscious in college can seem like an impossible task, especially with the abundance of social events and new experiences to be had. It’s not uncommon to find situations where too much going out can result in a week of instant ramen for dinner.
Coupled with rising tuition, textbooks, sudden emergency expenses as well as monthly bills and basic necessities, the chances of saving money are often lower on the list of responsibilities.
With some degree of planning and setting realistic goals, saving money can be both a rewarding and positive experience. Subsisting on instant noodles may initially seem like a daunting proposition, but with some consideration for monthly expenses, it’s possible to budget a student’s finances responsibly during college and avoid making compromises in life. college experience – so put those noodles back on the shelf.
Before attempting to pursue a financial plan, it is essential to reassess a few key factors to better understand where adjustments can be made. Start by determining a net income, which is the total amount of income that can reasonably be expected after taxes. Consider all existing savings accounts, as well as all relevant assets. Since the amount of money that can actually be spent and saved is determined by net income, it is crucial to have a good idea of how much money is coming in and to consider all the variables that can affect this. amount, such as a change in scheduled hours. or the purchase of the necessary material for the courses.
Once an estimate is made regarding net income, use the same strategy to determine fixed and variable expenses. By collecting recurring bills and payments throughout the month, it’s easy to estimate how much money is being spent. Categorize your expenses by determining what is essential and what is not. By determining both revenue and expenses, the critical step of determining where discretionary spending cuts can be made becomes much more manageable.
Indeed, the objective of determining the amounts of income and expenses is to understand the relationship between income and expenses. According to the Office of Federal Student Aid, a quick rule of thumb for determining overall income and expenses is to understate income and overstate costs; this can unintentionally produce excess funds after all is said and done.
The backup method
Once the income-to-expense ratio is determined, it’s time to establish what type of savings method will work best. Fortunately, the variety of options makes the savings process incredibly easy. Whether the goal is to automatically save money on purchases, get a comprehensive view of budgeting practices, or get personalized suggestions on where to save money, there’s certainly an application that meets every need, such as the Mint budgeting application, which is available on Google Play and the Apple App Store.
In addition, there are several offers from banks and credit unions in the form of savings accounts. These accounts often come with specific features created for students, such as low or no monthly maintenance fees, no out-of-network ATM fees, and competitive annual percentage returns.
A great consideration to make is the idea that any expense considered discretionary most likely has a more cost-effective solution that can give a savings account a decent boost. For example, the average cost of a restaurant meal for someone may be between $10 and $15. However, by packing a lunch or a coupon, they can make significant savings that can fit within their budget.
Alternatively, shopping at discount stores can provide various savings on basic necessities, further increasing the savings potential. More often than not, there are usually an abundance of resources available to students on behalf of their university or college, such as pantries and student discounts or student aid.
By using these services, choosing to find offers, and applying for financial aid or scholarships, a substantial amount of money can be generated to take college savings accounts to the next level.
Whichever type of savings account or app you choose, the idea is simple. Your funds must fall into one of three categories: emergency funds and savings, necessary expenses, and discretionary funds. Any income earmarked for essential living costs should be prioritized for this purpose only. Keeping this balance is vital and having this mindset is key to setting realistic goals for budgeting and savings.