The Simple Guide to Money Management for Students
Back-to-school season is upon us and we want to take this opportunity to educate our young and promising readers about Money Management. Establishing good money habits and practicing sustainable financial practices at a young age is key to a bright financial future. Learning how to manage your personal finances as a student can help you gain the life skills you need to financially support yourself independently in the future.
Building the habit of tracking your finances at a young age gives you an edge as an adult when you start managing your own income. Tracking your finances may seem tedious but it enables you to (1) take control of your finances and (2) uncover bad money habits that you can unlearn and replace with better financial practices. You can track your finances by using a budgeting app, an excel or Google spreadsheet, or by simply writing them down in a notebook. The key to consistently tracking your finances is to find a system that works for you!
If you are receiving financial support, like a weekly or monthly allowance from your parents, it’s important to learn how to live within your budget. The easiest way to make a budget plan is to follow the 50-30-20 Budget Rule. To practice this budgeting method, you need to divide your monthly allowance into three categories: 50% for needs, 30% for wants, and 20% for savings. When creating a budget plan it’s important to assess your expenses and to analyze where your money is going so that you can tweak and make adjustments as needed.
If you’re following the 50-30-20 Budget Rule, you should put the 20% of your savings into your emergency fund. An emergency fund is money set aside for unexpected expenses and financial emergencies. Saving for an emergency fund is a great way to build financial confidence, significantly reduce financial stress, and develop a healthy saving habit! As a student, you should save 3-6 months worth of your monthly expenses to build a strong emergency fund.
Increase your cash flow with a side hustle or a paid internship! Starting a side hustle or getting a paid internship is not only great for your wallet but it's a good way to gain experience that can look good on your resume. Try to look for work that’s relevant to your course or that involves building skills that employers look for.
Money can be a sensitive topic but as you get older and start gaining more responsibilities, it’s important to start an open and honest conversation with your parents about your family’s financial situation. Discuss important money matters such as insurance, debt, investments, and financial plans. It’s also important to assess your family’s emotional attachments with money because this often shapes limiting beliefs.
Gaining an awareness of your family’s financial situation can help you make informed financial or life decisions in the future. For example, in the event that one of your parents gets sick, having the information about your parent’s health insurance can help you quickly find the facility where their treatment is covered by their insurance.
The sad truth is: Personal Finance or Money Management is not taught at school despite how crucial it is to our individual success and the quality of our lives. That’s why, as a financial planning firm, we take it upon ourselves to make financial education as accessible as possible. If you check out our blog posts or our social media pages, you’ll find that we readily provide a lot of free educational content or resources to empower our audience.
There are so many other free online resources that you can look into to self-educate yourself on personal finance. You can check out YouTube videos, blog posts, podcasts, and many more! Financial Literacy is a valuable life skill so make the most of all the free resources you can find. Having a deep understanding of personal finance or money management can empower you to make informed decisions that will enrich your life and lead you to financial freedom.
