BY ANTON LUCANUS
College students have been forced to be much more responsible toward their budgets in the past few years thanks to the increase in student loans and lack of campus jobs. While it might seem unnecessary to put together a budget to stick to at such a young age, the truth is that more and more university students have had to learn this skill earlier on. This can be useful when planning a year of study abroad or having extra cash for activities outside the classroom.
In fact, many expert cite having a budget as one of the best things young people can do in order to learn about properly managing their finances. “My simple budget gave me security, flexibility, and confidence while building mindful spending and other financial health skills that would pay dividends for the rest of my life,” writes Brett Whysel for Forbes.
While some knowledge students won’t take beyond their four years at university, having a clear idea of how much money they can spend each month is a skill that can follow them into their adulthood. Budgeting provides tools that can help students stay out of debt in the future, while teaching them what they can and cannot afford—especially if they graduate with a number of student loans. Since the cost of college tuition tends to rise every year, it is now more important than ever that young people have an idea of what the cost of their education will be and how they can afford payments once they are finished.
An article in Forbes states that a large amount of borrowers who have taken out loans for their college education have had trouble paying it back. In fact, up to 11% of former students end up defaulting on their payments. The article also comments that teaching budgeting at a younger age can often impart students the knowledge of how to handle larger payments in the future.
So how can you keep yourself from falling into the trap of defaulting on loans or finding yourself lacking funds during your semester or year abroad? Fortunately, there are some simple steps that you can take in order to prepare yourself for a life outside of school and the monthly payments you will have to pay when you are done.
Tracking what you spend is one of the simplest ways to acknowledge where your money is going. Once you have a general idea of what you spend each week on the necessities, such as groceries, transportation, and meals you might need to eat out, you can have a clearer idea of what you should put toward savings and fun. Even if you have some debts to pay, it is unrealistic to expect that you should not put any money away for the future or that you won’t be able to enjoy a night out with friends.
“It’s easy to spend money when you aren’t tracking your finances closely. Track every expense, even those paid in cash. There are now many banking and online auto save features that make it easier to have money deducted monthly to help you save,” mentions Nick Stamos in an article for Forbes.
Experts recommend that no matter what your financial situation is, if you can put away at least 10% of your income into savings, you are already ahead of most of your peers. Even if you are also paying back student loans, it is a good idea to continue to save for your future, as well. As you feel as though you are in a more comfortable financial position, you can start to add more each month. Regardless, contributing to your savings is an important part of budgeting that can be helpful to start learning early rather than to wait.
There are also a number of ways to keep track of what payments you have and which areas you can cut back on your budget. Software like a bitcoin wallet can be useful to track investments and savings, while even online payments like PayPal can be useful in showing you a list of transactions that have been completed. Being able to see where your money goes can be a useful feature and allow you to choose where you might be able to cut back on expenses. Several apps are also an option if you like having access to your finances in almost any location, and they can help you keep track of your basic payments.
Recent articles have commented that students do not have a grasp on basic finances, which can make transitioning from a school environment to a life with student loans much more difficult. However, budgeting allows young people to practice new skills with money before they have to make payments that will affect their lives in the future.
Byline – Anton Lucanus is the Director of Neliti. During his college years, he maintained a perfect GPA, was published in a top cancer journal, and received many of his country’s most prestigious undergraduate scholarships. Anton writes for The College Puzzle as a means to guide current students to achieve personal and academic goals