Managing your finances can help you focus on your studies and your life
Financial knowledge is one of the fundamental tools that each and every student must have in order to experience financial freedom in this crucial phase of their life. The following points highlight of the ways in which students or even non-students may apply so as to effectively manage personal finances.
1. Have a Personal Budget
The most important thing to note is a budget. If you do not have a budget then it means you do not have possess a financial plan as an individual. Having a personal budget helps you see with a clear picture and transparency your financial situation as a student and hence helps in managing your personal finances easily. A personal budget allows you to have focus in your financial planning as a student.
2. Know your Expenses
Most students are unaware of the amount of expenses that they incur on a monthly basis. Knowing your monthly expenses as a student helps in managing expenses thus some of the unnecessary expenses that are incurred may be reduced so as to have a match with the amount of income that is received on a monthly basis. Both variable and fixed expenses incurred must clearly be known which helps to know the amount of expenses to cater for in the following months. Furthermore, both cash, debit and credit card payments should be recorded as well.
3. Know your Income
Most students have knowledge of their income they receive on a monthly basis but with less knowledge of their expenditure. If as a student you subtract your monthly expenses from your income and get a negative, then it clearly shows that as person you are spending more than you are earning thus there is need to reduce your spending in order to suit your income. However, if the difference gives a positive, then you are on track therefore you can either increase your spending or your saving. Having knowledge of your income and expenses creates an opportunity for you to take charge of your finances.
4. Avoid Borrowing
The most crippling parasite to financial freedom in debt. As a student, avoid borrowing at all available costs. Most students fail to effectively manage their personal finances as a result of too much unnecessary borrowings. If you want to live a life of stress, borrow too much and face the consequences. Most people in this life are bound by the cords of debt, there is no reason to borrow if you know that the amount you are borrowing is way far from your earnings.
5. Reduce Unnecessary Expenses
Most of the time due to lack of proper financial planning, you end buying the things that you do not need use thus increasing unnecessary expenditure. In order to manage finances effectively as a student, the unnecessary expenditure must be removed or be reduced from the list of presumed expenses.
6. Create a Life Style of Saving
It is hard to save but it is one of the ways to enjoy financial freedom. Save at least not less than 10 percent of the income you earn per month. At the end of each month it means you have money to spent in rainy days. The more you save, the more you create financial discipline. As a student, you can actually save in order to start a small business, which could turn out to be the most rewarding use of your savings.
7. Read Finance Management Resources
Every useful information pertaining to life skills is hidden in writing. The other key point to note is studying existing financial management resources. Make it a habit to acquire knowledge from the financial gurus in the world of finance. It is also crucial to approach financial companies and seek advice that are finance related. The ability to manage your personal finances reduces stress levels. Inclusive, stay well-informed, practice sound financial management, and feasibly one day you will be the next personal finance guru and have a lot of people sharing your content and seeking your expertise on the best way to manage your money.
8. Think About Your Goals
If you do not have personal goal, then you need to starting having goals. If you are considering to marry or get married, buy a car, expanding your education, buy a house or even starting a business at a certain age, then you must manage your finances carefully. Personal goals give a reflection of where you want to go in life. The more you think about your personal goals, the more you become very effective in the way you manage your finances. Hence, goals give birth to effective financial management.
9. Beware of Sand traps
At times as a student, you are trapped into a lot of spending as a result of outings with friends. Whenever you plan to go out, make sure you have taken that into consideration in your budget. Most of the times you end up having cash flow due to failure plan effectively.
10. Share your Financial Plans with the Person you Trust
Find the person you can share your financial plans and the challenges you are facing. You should select a friend or a relative that you trust so that you can discuss sharing ideas on how to effectively manage finances. Make sure you choose a person who has vast knowledge on financial management.