How to reach financial freedom as a student
As a student, you have a unique opportunity to create the financial plan you want for the rest of your life. Students have a clean slate in most cases, meaning you have very few things to worry about when creating your financial plan.
However, this rare opportunity can easily slide out of your hands if you are not careful. Speak to most people who struggle with their finances, and they’ll tell you that they started making terrible decisions from their time in college. You don’t have to go down the same road as them.
In this review, we shall look at five practical tips on how you can get on top of your finances and charter your way to financial freedom.
Let’s get started.
1. Create A Budget
Being a student with few monthly expenses doesn’t mean you don’t need a budget. You still need one, and it must be detailed and realistic.
A detailed student budget should cover all expenses, including the money you spend on entertainment.
The budget should also be realistic to ensure you are comfortable. For instance, don’t be too aggressive in saving money when you are not allocating enough cash to essentials like groceries and utility bills. Saving is a good cause, but if your figures are not reasonable, you’ll slide into debt while trying to meet your basic needs in the name of saving money.
In the end, the debts will turn out to be more expensive and not worth the money saved.
So, sit down and develop a comprehensive budget and be sure to stick to it.
2. Start Saving Right Now
There’s no such thing as “the perfect time to start saving.” If you postpone creating a savings kitty simply because you are still in college, you’ll always have an excuse not to save even after you’re done with school.
Start saving right away. You may not make a lot of money switching between lectures and your evening shifts at the coffee shop but saving even $100 per month is better than nothing.
The small savings will earn interest as you study. By the time you are graduating and getting a decent job, you’ll have a decent foundation in your savings account. That’s so much better than someone who’s starting from scratch.
The other often overlooked benefit of saving as a student is it builds the culture of saving money from an early stage. This habit will become part of your life, and you’ll find it easier to save money once you enter the job market.
As you start saving, it’s vital to know which accounts to keep your money in. Shop around and find an account that is in line with your saving needs.
3. Start Investing
Just like saving money, don’t sit and wait for the perfect opportunity to invest. Start now.
The good thing is that there are lots of investment opportunities in today’s digital markets. Plus you don’t even need big bucks to get started. With as little as $500, you can purchase treasury bonds which will earn decent returns for the money.
Investment apps and software can also help you find many affordable opportunities out there. Some software will even analyze markets and funds to help you invest wisely.
You should know that investments come with a considerable amount of risks. This is particularly so for opportunities that promise high returns. Do your due diligence to ensure your money is in the right place.
4. Be Careful About The Loans You’re Taking
It’s pretty normal for students to use loans. And to be honest, there is nothing wrong with it. However, the biggest challenge is what the purpose of the loan is. It’s fine to take cash loans if the salary from your night-shift job is delayed or if your parents are having challenges wiring your upkeep.
However, if you are taking a loan with the wrong intentions, then you’re setting yourself up for a major financial crisis.
Always ask yourself whether you really need that loan or it’s simply a want. Unnecessary debts will strain your finances and might have long-term consequences.
5. Pay Off Your Debts
Get into the habit of paying your credit card balance on time to avoid expensive penalties. If you have other personal loans, develop an effective plan to repay them as well.
In your debt repayment plan, make sure to prioritize debts with high-interest rates. In fact, it’s recommended to prioritize expensive debts over other items like savings. That’s because loans have a way of accumulating fees quickly, which could leave you trapped in endless debts.
The earlier you gain control over your finances, the higher your chances of achieving financial freedom. Start practicing positive money management as a student, and you will have an easier time after graduation.
