As students, you are already having a few adult responsibilities. One of such is budget planning and management. A large percentage of students will not be living with their parents but are living alone or with a roommate or with roommates. How then can you ensure that you properly manage your finances? That is actually the whole essence of this conversation. Whether you are from the upper-class, lower-class or middle-class, we all need money management skills. In order not to be broke by mid-semester, here are some tips you should consider.
The Necessities
Well, I think this is the most important tip. You need to list out all the things you want to buy that categorize them into ‘needs’ and ‘wants’. Just to be clear, ‘needs’ are the things you cannot do without like bathing soap, school books, your rent and so on, while ‘wants’ are the things that you can do without like the latest iPhone, junk food, unnecessarily expensive extensions and so on. ‘Wants’ are great, they are also unnecessary at this point in your life. Your sponsor will most likely give you money that will be enough for the necessities, except they cannot afford all your needs. The truth is, your needs increase as your income increases. Some “wants now become ‘needs’ to you. It is like a universal law. One thing I want you to understand is that you will get there. Do not let peer pressure make you do things that you are not proud of.
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Also, in this time and age, students should be intentional about getting extra skills. So, I would advise you should create room in your budget for learning skills that will complement your ultimate goal as an individual.
Mini-Investments and Businesses
So, I mentioned earlier that there are some people whose monthly allowance may not enough for their needs. Some do not even get allowances. What is that business you have been wanting to start? Or that business you can do? Or that investment? It’s time to try it. One thing you should know about wealthy people is that they use the money to get more money. Whether it is buying and selling, investing in stocks, a courier service, maybe even catering services or hairdressing or fashion designing, it is time. These days, everyone should have a side hustle. Put your talents to good use. There are ample online resources that will help you grow your business; in terms of acquiring insights into the business and providing you with a platform to market online. The amazing part? Most of these resources are free, all you have to pay is attention and well, some data.
Another thing is that you have to be sure it is the right thing for you. Is it sustainable? Is it something you love to do? Is it going to affect your studies negatively? Ask yourself the important questions before you venture into any business or investment
Save for the Rainy Day
A certain percentage of your income or allowance should be saved. Savings are very important especially in cases of emergency or capital to start a business/investment. Do not be a ‘spend it all’ kind of person. It is irresponsible to spend all the money that you receive. So, start a saving habit today. There are also times when you will be genuinely broke, even though you stuck to your budget and managed your money well. In cases like that, you would have a savings stash to fall back. Guess why? You planned well.
Have a Weekly Budget and Stick to It
Financial planning requires a lot of calculation. Now, we need you to do a little math. I hope you like math; basic math, at least. So, after you have deducted all your bills (needs) from your allowance, you would have a certain amount of money left. Assuming this is X amount of money, remove a small percentage to save. After you deduct savings from X, you get Y. Then assuming it is a monthly allowance, split that Y amount into 4. So, Y/4 will give you Z. This Z amount of money should be what you spend per week. Now that you have successfully done this, you now need to discipline yourself to stick to it. The self-discipline part is the hard part really. I am not advising you to be rigid with your money. People may come to you for help. Render help but know that you cannot help everybody. Be generous but also be wise.
You Still Have to Have a Little Fun, You Know
I cannot leave this out. You are young and you should have fun. So, create allowances in your budget for fun. ‘Fun’ here includes buying clothes, eating out, going to the cinema and so on. Basically, your wants. You are not supposed to get all you want but getting some of the wants is also important so you do not get bored or boring. You need that juice in your life.
Conclusion
From what we have discussed, the main value you need to manage your finances is self-discipline. Just to give a rough estimate, I would advise that 60% of all you earn should be for your bills, 10% for savings, another 10% for investment, another 10% for fun and another 10% for learning (self-improvement not formal education). Have all these things in place so you do not go about borrowing or disturbing your sponsors for more money because you exceeded your limit for a specific period. As cliche as it is, the man that fails to plan, plans to fail.
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