College is one of the best times of your life: you’re always meeting new people, are regularly exposed to new and revolutionary ideas, and will make memories that last a lifetime.
However, college can also be challenging. As a student, you’re always juggling responsibilities and are constantly aware of the costs like school fees, books, food, and accommodation.
These responsibilities can lead many to put their head in the sand during their college years and ignore their finances. But this approach is unlikely to alleviate any financial anxiety you might feel, and will only inflate your debts when you graduate.
Instead, you should take a forward-thinking approach to budgets, expenses, and income — here are a few tips to help you along the way.
You cannot address your finances properly without a clear budget.
You can create a realistic budget by adding up all of your income and expenses. This can be tricky, as most students who are also working are on hourly contracts which might fluctuate around seasonal shifts and finals. You can either account for these fluctuations ahead of time, or should set a “minimum income” amount so you’re never caught out.
Next, you should divide your expenses up into essential and non-essential expenses. Essential expenses should cover any non-negotiable fees like rent or food, and non-essential expenses should include cash for good times (we’ll get to that later!).
Once you have a clear picture of how much you expect to earn and spend every month, you should start to think about how you can make your money work for you through investments and interest on savings — but only after you’ve established a healthy emergency fund.
An emergency fund protects you from unexpected fees like medical bills or car maintenance fees. This might sound boring, but it’s essential if you wish to have financial security and peace of mind.
Determining the size of your emergency fund depends on your current context. However, in general, you should budget to cover at least three months’ worth of expenses in case you lose your job or are hit with an unexpected bill.
Cars are money pits. You can easily spend hundreds, if not thousands on simple repairs, and cars require consistent tax and insurance payments. As a student, you should seriously consider ditching a car until you have a reliable source of full-time income that can support your vehicle without putting an extra strain on your budget.
It’s hard to know if life without a car is right for you, and you should consider factors like your proximity to campus and access to public transport before you list your vehicle on craigslist. However, there are serious health benefits to going without a car, as you’ll likely cycle or walk far more than you ever did before.
A budget isn’t a spreadsheet that exists to make you feel guilty. A good budget should allow for a little flexibility around travel, food, shopping, and socialization. As such, it’s a good idea to set an affordable amount aside to pursue good times and memorable experiences.
As a student with fewer commitments, you should seriously consider spending the money you budget for good times on summer travel plans. Summer vacation will help you see the light at the end of the spring semester tunnel, and will give you a chance to make meaningful connections with the people you’ve met while studying.
You can’t achieve financial independence overnight — but that shouldn’t put you off from making proactive financial choices that are based on a clear budget and some forward-thinking. That might mean you need to ditch the car for a few years, but it will also give you the flexibility to spend a little extra on summer vacations or road trips with your new friends.