Student contribution: Finding financial stability
I’m going to start this off with some tough love. It’s unrealistic to think you’ll never be in a tight spot financially. Take me for example: I had just paid off all my credit card debt (more on that later in the month) and was feeling totally in the clear — until I broke my leg, leaving me unable to work and with no income for more than three months. Major setback. And was I ready for it? Not at all.
As students, we don’t usually have huge financial cushions to pad us when we make mistakes with money. But I don’t think being unprepared should be our financial norm. I’m aiming higher, and I think you should too. I want my new normal to be trying my best to avoid setbacks (easier said than done, I know), while being as prepared as possible in case they do happen. Follow my three step plan to create a more financially secure situation.
Step one: Build better habits
If you have a job, set aside a portion of your earnings for savings every time you get a paycheck. It will change the way you view your money. Some people spend the majority of their paycheck the minute they get it and end up having to scavenge the couch for spare change to cover things like rent. Others deposit their check at the bank, transfer a percentage to their savings, and take a little extra time to stare at the ATM and appreciate the legacy they are starting. Be the second person. And if you don’t have a job, it’s time.
Step two: Separate needs from wants
Take a hard look at your spending habits. How much of your money is going toward necessary items like food, rent and school, and how much is going toward “want” items? If you don’t have enough left over to save a little for emergencies, the “want” section is where you make the first cuts.
Step three: Have realistic expectations
Be open to challenging yourself to save and budget better, but don’t expect to spend only $60 a month on food. Be stern, but be realistic. Lots of students (and even working professionals) don’t have any form of emergency savings, but that doesn’t make it right. Making a budget is a great start, but remember that it only works if you follow it and adjust for those needs and wants.
The most important factor is knowing where your money is going. Track your spending in whatever way works best for you — keep receipts in your wallet, log spending on your phone, or use an app for coupons or cash rebates. Adjusting your spending habits, understanding your financial health and introducing ways to save are the keys to finding your comfort zone financially.