- What is money management?
- Tips on how to manage money as a student
Money management is the process of tracking expenses against your income. It also includes budgeting and investing processes and methods.
Learning how to manage money as a student can start as early as your teen years. Though you may not be earning money at this age, there are chances that you are getting a small amount of pocket money.
Learning how to manage this money as a student is the first step in how to learn money management skills.
Students are at a stage when they do not have much access to money. Therefore, the little money they have must be managed well.
Learning how to manage money as a student will not only help you through the tough years of limited finances but will also help you learn to manage the money that you earn from your career.
Many times when fresh graduates earn their first salary, they become overwhelmed with the cash in hand. With such large sums in hand, they often spend it on frivolous items and end up having nothing by the end of the month.
However, learning how to manage money as a student can go a long way in helping you manage your money at a later stage.
Here are a few guidelines on money management skills for students to help students through the tough years of limited finances.
1. Differentiate Between Needs and Wants
The first and foremost in money management for students is to differentiate between needs and wants. Budget your needs and discard your wants.
Needs are something that you can not do without. But wants are desires that you can do without. If you buy something that you do not need, you might have to sell something you need.
2. Keep a Stringent Budget
Another method of how to learn money management skills for students is to prepare a budget and keep within the budget at all times.
A budget is an estimate of total income and expenditure in a fixed period. It also includes planning your expenditure as per your earnings.
For this, you can maintain a diary with date-wise expenditure entries. This way you get a rough idea of your expenses and you can budget your month accordingly.
If you are used to technology then you have apps that can track your income and expenditure.
3. Take Note of Your Highest Expenditure
Once you make a note of your expenses, you will notice your highest expenditure. Take note of this and find ways to reduce this expenditure.
For example, if you notice that you spend a lot in the college canteen, you can try and reduce that expenditure by bringing packed food from home. It’s a healthier option and saves your money too.
4. Tuck in A Few Bucks
Another way how to learn money management skills is to put away a few bucks safely at the beginning of the month. A few months on and you can make a small saving too.
Do not save what is left after spending, but spend what is left after saving.
5. Quick Cash in Hand Might Flow out As Easily
Cash in hand is easily spent. However, cash in the bank is out of sight and it is more probable that you can save more.
Create a bank account and deposit your monthly income or “pocket money” into your account. Withdraw only fixed minimum amounts, keeping the rest safely in the bank.
6. You Don’t Need to Spend to Have Fun
A student’s life is all about fun and learning. Every student, undoubtedly, must have fun in college. Fun with friends is an inevitable part of college life.
However, remember, having fun does not always mean you have to spend money. There are lots of ways you can have fun without spending a single penny.
For example, instead of going out to a restaurant, invite your friends home. You can also spend time in a public park with friends rather than going to a restaurant and spending your money.
7. Stay Away from Online Shopping
Online shopping amongst college students has become a rampant issue. A survey conducted by Shuai Tang and Dong-shan Yang from the School of Education, Sichuang University, China revealed that Nowadays, Internet shopping addiction has developed into an important social problem, which has attracted much attention.
In a 2011 online survey of 2,580 people conducted by the China Youth Daily, 71.1 percent of respondents said they were “addicted to online shopping.” Of these, 25.6 percent felt they had a “relatively serious” or “very serious” online shopping addiction, while 45.5 percent said they were “a bit addicted”.
It can be seen that online shopping can be intimidating for college students. One of the main reasons for this addictiveness is that in online shopping, money can not be seen.
The figures on your online account just keep reducing which does not give an immediate feel of expenditure.
8. Find the Odd Jobs
Another way of how to learn money management skills for students is to earn while you study. As a student, it is also possible to supplement your pocket money by working odd jobs.
Doing this will give you a sense of pride while you earn your own money. It will teach you to value what you have earned from a very young age.
You May Also Like Job Hunting Tips for Students
9. Do Not Use Credit or Debit Cards Online Payment Options
One of the best ways of how to learn money management skills is to never get used to using cards or online payments for transactions.
The reason is that these methods are a bit too convenient and easy. With payments being made with just a swipe of a card or click of the finger, it’s easier to spend money these days.
Do not take the easy way out. Make it tough to spend. That will deter you from spending.
10. Save on Transport, Walk for Health
Students spend a lot on transport and travel. Transport can mean a daily commute to and from the college to home or hostels.
In the case of out-of-station students, travel can include the expenses of going home for the holidays.
An excellent financial management tip for students is to walk as much as possible. If you need to take a local bus to college every day, walk up to the next bus stop instead of the nearest one.
This way, you make your bus travel distance shorter and save a bit of money there. What’s more, your walk will be considered a great form of exercise.
11. Don’t Feel Bad to Ask for Hand Me Downs
As a student, you will have access to used books of your senior students. Ask your seniors for their old textbooks so you can save on buying new books.
You have not only done a favour to the environment for recycling and reusing but you have also saved your money.
In the same way, you can ask your elder cousins for some of their old clothes that are in good condition. They will be more than happy to pass on their good clothes.
12. Hone Your Bargaining Skills
One of the best money management tips that will help you throughout your life is to hone or sharpen your bargaining skills. Negotiate your way around things in life.
Being in control of your finances is the biggest stress reliever. If you have control over your expenses, you automatically learn to save.
As a student, it is important to learn these tricks early in life. Something imbibed in you from a young age will stay with you forever.