08 Apr Is Financial Responsibility Only For Nerds?
Financial Responsibility, I swear that I can see your eyes glaze over through my monitor. Yeah, it sounds boring, and it’s not always fun, but unfortunately like many things in life it’s necessary.
What is Financial Responsibility? Basically it means being responsible for your finances, duh huh? So, you no longer rely on your credit card to buy textbooks, or your parents to bail you out because you spent a little too much on drinks last week.
Why isn’t it boring? Well, think of something you want, I’m going to assume that most of you thought of something that involves money, having a family? You need to pay medical bills – and perhaps even buy a house, nice shiny sports car? Buying it entirely on credit is a bad idea. Essentially if you’re financially responsible now, then you will be able to do what you want later in life.
I know that the future seems a long way away right now, but surely you can chuck at least $5 a month in a savings account? At the very least you’ll have some savings towards a graduation present for yourself, if you manage more you could be able to do a heck of a lot more. (Just as a note, I make sure I save at least $5 a month, I have enough for a deposit on a 2 bedroom apartment/small house in my parents’ town. Can you beat that?). On the other side of things you should get into the habit of not spending money unnecessarily, nights out with your friends are awesome, but should you really take it in turns to buy rounds? Or perhaps just have 1 drink less – every little bit of money helps. Don’t go overdrawn on your account ever, it’s pretty demotivating and if you find your spending is uncontrollable then you’ll be there for a long time.
So go and open a free online savings account right now, and then stick some money in. As a bonus do it as soon as you get any money, try to save at least 10%. After all, if it’s not there to spend in the first place it won’t seem like such a hardship not to have it, will it?
Ways to Stay Out of Debt
Create a budget. Budgets aren’t boring, they’re not just for old people – and they don’t stop you doing what you want. In fact if you want to have more money to spend on nights out then a budget will help you (surprised?). The simplest way to do this is to look at how much money you have coming in, take away your rent, phone, and any other expenses you know are coming up (dining hall card, magazine subscriptions, etc) and then divide what’s left by the remaining weeks. If you receive student loans on a term-by-term basis then you should do this once per term, if you’re working then work it out based on your pay cycle (how often you’re paid).
Stay out of debt. In some ways it will be almost impossible to stay completely out of debt – but try to learn what is good debt (student loans) and bad debt (credit cards you don’t pay off every month).
Plan ahead. If you want to have a lazy summer of just holidays and sunbathing then you should plan for that now. Look up some potential destinations and work out the cost. Try to save as much money as possible now, and take advantage of early bird deals to get a discount by paying early. As a bonus it will give you something to look forward to through all the papers and exams.
Get organized. This isn’t strictly money related, though knowing where all your bank statements are and that they’re in order is a good idea. But try to be organized in general – it will mean you can find things quicker and you won’t waste money re-buying something you already own.
Don’t Spend it All at Once!
The “spend it before it goes” attitude is a problem around the world – your money won’t run away from you if you don’t spend it, in fact not spending it will give you even more money because of interest. Every year I see all the first years at Uni spending all the money within the first week or two, and then they end up calling their parents to bail them out – and thanks to the financial climate most parents are saying “no”. Do you want to be reduced to eating everyone’s left overs until the next student loan arrives? Have a look at this plan:
- Work out how much money you need. Plan for textbooks, rent, food, nights out, everything.
- Work out how many weeks you have left until the next loan installment arrives.
- Divide the remaining money (student loan – money needed) by the weeks you have until the next installment arrives.
- Spend less than that per week – and try to cut the costs on everything you allowed for in step one too.
If you have more needs than your loan covers try to cut the costs – if you’re short on money you can survive with a few less drinks per nights out, or cutting out a night out or even all of them, try second-hand textbooks, selling things you no longer need and getting a job.
Just remember, when the money’s gone it won’t magically refill – you need to plan ahead, even it’s just the bare minimum.