5 Tips to Become Financially Responsible While in College
In order to lead a prosperous life, it is essential that you recognize the importance of managing your finances properly. It’s never too early to start thinking about your finances and planning for your future. If you want to become a financially responsible individual, then start by following these 5 tips provided by UEI College:
1. Make a Budget
Roll up your sleeves and get ready to create an awesome budget. Start by looking over your monthly bank statements, and highlight your most important living expenses. For example, rent, utilities, car payments, food, school tuition, etc. Once you have established your main living expenses, start by cutting out extraneous expenses that may be keeping you from saving. By following your set budget, you’ll learn to differentiate between a need and a want. Most of the time, we spend money on things we don’t really need, but just want at the immediate moment. Learning to curb impulse buys is the key to learning how to save.
2. Start Saving
Start by establishing a rainy-day fund, so that you have enough money to cover your living expenses in case of an emergency. Begin by saving 5 to 10 percent of your income each month. Your rainy day fund should be able to cover your most important bills, e.g. rent, utilities, car payments, etc. The more money you save, the better off you’ll be in case of a tragedy. Think of saving money as a bill that you pay yourself each month.
3. Use Credit Cards Only for Emergencies
Credit cards come with high interest rates, the more you owe, the more you’ll pay in the long run. If you must use a credit card, choose one with low-interest rates and no yearly fees. The extra costs of using credit cards can wreak havoc to your savings plan, so use them only for emergencies. For example, on a credit card with a balance of $1000.00 dollars with an interest rate of 20 percent, if you send monthly payments of only 25 dollars, it will take you 5.54 years to pay off that debt. The total amount of interest you’ll pay over the course of your credit card debt is money you could have been saving.
4. Save on Transportation
If you own a car, have you considered carpooling with other students that live near you? Gas is very expensive nowadays, and sharing this expense with a few classmates will help you save a little money. Carpooling won’t only benefit your finances, but it’s also better for the environment. Fewer cars on the road mean fewer greenhouse gas emissions being produced.
If you live near your campus, you can also ride your bike, instead of driving your car. You’ll not only save money, but you’ll also get in shape.
5. Learn About Investing
It’s never too early to start learning about investing. Read books or reputable online articles that will teach you the basics about investing. Check out Investopedia’s Investing Tutorial to learn more about the financial world. If stocks seem too risky for you, explore the market and choose a suitable retirement account, which will meet your needs. By managing your finances properly, you will be able to save money and retire early.
By following these 5 tips, you’ll be on your way to becoming a financially responsible individual. Benjamin Franklin said it best, “A penny saved is a penny earned.”