You’re a soon-to-be graduate, applying for jobs and are about to start out in the working world. If you aren’t doing it already, soon you’ll have to manage your own money. Many haven’t yet tried setting up a budget while others simply don’t know how to create one. Few have seen their income and expenditures all on one single page. Setting up a budget and sticking to it is a skill everyone should master.
This is a skill that can be used for the rest of your life. While universities offer classes from psychology to chemistry, there are few classes available on personal finance management. So you have to learn it all by yourself. And one of the best ways to do this is through handling your own money. University is the best place and time to learn budgeting skills. So when you graduate, you can easily transition into independence.
Many students get caught up in the varsity lifestyle and forget what their end goal is: to develop a financially independent future. Teaching yourself about budgeting will enable you to handle responsibilities and develop a mindset of accountability. Here are a few things you need to know about setting a university budget.
What are your goals?
Creating a budget is all about establishing goals. What is it you want to achieve? Perhaps you want to buy a car or a new laptop. Whatever your goals are, your money should be destined to go somewhere. Unfortunately, if you don’t set goals, your money will run wild and you’re likely to spend it on things you don’t need. It’s important to take control of your money by setting a budget. If you’re saving money for the summer holiday, then you should establish the goal and stick to it. Establishing realistic budget goals is the first step in becoming financially independent.
Know your available resources
As a student, there are different ways for you to get some kind of income. You could either get a monthly allowance from your parents or have a part-time job. Whatever your form of income, it’s important to know how much you get in monthly. That way you can set up your budget accordingly.
What are your expenses?
It doesn’t matter what year you’re doing, you’re bound to have expenses. Some expenses include food, clothing, textbooks and transportation. The problem that many only see that when it’s too late and other expenses are building up. So, when you create your budget, take a look at all your necessities on a monthly basis. That way you’ll know what’s really needed and what’s not. The money that’s left over can be added to your savings account.
Put your loan repayment into your budget
Are you studying on a student loan? Well, you should incorporate that into your budget too. It’s best to start repaying it as soon as you start earning. The interest on student loans can quickly grow, so it’s best to start repaying as early as possible. So reduce your student loan debt by allocating a payment towards your loan monthly. It won’t only lower your overall debt but also improve your credit record.
How much are you saving?
Saving is an important habit you should develop in your early years as a student. It might seem difficult at first but it’ll benefit you in the long run. Take a look at your income and budget first and determine a minimum amount that can be allocated towards your saving. This is one reason why creating a budget is important. The amount of money you put away for saving doesn’t really matter as long as you put something in your account monthly. Students have a bad habit of spending all their money as soon as they get it. That’s a habit you should get rid of as soon as possible.
Plan for the future As mentioned earlier, budgeting is a skill you’ll use for the rest of your life. So it’s important to start as early as possible. Budgeting will teach you how to finance for many other things. For instance, if you’re a finance graduate you might be assigned with the task to finance for mining equipment or any other business equipment. You’re likely to know how to use the budgeting skill in a work setting if you teach yourself now. Budgets are usually short-term plans for how a business will operate. It shows how the money will be spent and how income will be received. Creating a good budget will allow a company to plan and react to unforeseen circumstances. All this starts with setting your own personal budget.
Being aware of your income and expenses and saving and planning for the future are all critical to personal financial management. No matter what year you’re in, it’s important to develop a positive budget habit and stick to it.