As the semester comes to a close, many students feel the financial squeeze in addition to the pressure of looming finals. A finance major or not, young adults are forced to budget their expenses as to live within their means. When your credit card bill is composed largely of transactions at Turtle, you know you’re in trouble. Since most students are not taught the ins and outs of personal finance, money management is a growing problem for many college students. Oftentimes personal finance is learned from a money mistake. To prevent a financial meltdown, here are a few tips to get you on your way to fiscal responsibility.
1. Do not spend more than you make – This is a simple enough rule that most students break. Money going out must equal money going in. Take the time to calculate your annual income, and then create an (acceptable) budget based of these earnings.
2. Know where you spend your money – So many of us are frivolous spenders. Dining out eats away one’s earnings. Spending approximately $25 per week on take out accounts for nearly $1200 of your annual earnings. Treating yourself to a bimonthly manicure and pedicure will cost your around $840 per year. Save some cash by learning to cook for yourself and by painting your own nails. Additionally, avoid frivolous costs, like late fees and parking tickets. Get your head in the game.
3. Be weary of the almighty credit card – Americans living beyond their means were a major cause of the credit crisis. This tip reverts back to spending within your means. If you can’t pay off your balance in full, cut up your credit cards and rely on your debit card or cash. Otherwise, interest rates are sure to detract from your income even more. Credit cards should be used to establish a great credit score, not to fund a lifestyle you can’t afford.
4. Start saving – There’s no reason to develop a fancy savings plan at this point, but it is certainly time to start saving. Simply open a savings account and contribute a small amount of cash each week. Now, you’re on your way to a rainy day fund and one step closer to retirement.
5. Get a job – Sorry, but I doubt you’re too busy to find time for part time work. Follow the advice of one professor at the University of Wisconsin, in an interview with Forbes: “I tell my students there are 168 hours in the week…56 for sleep and 40 for school. That leaves 72 for other activities, including part-time jobs and socializing. Students are astonished by this and I tell them that time is their major resource.” I’d be hard pressed to find many students working 40 hours per week on schoolwork. Thus, time spend on addictinggames.com is money down the drain.
If time and money are on your side, travel to a developing country and see how little is necessary to survive. Seriously, the rest of the world is very resourceful, and most of us would fair well to do without. As difficult as it may seem, if you do not take control of your financial destiny, someone else will find a way to manipulate it in his or her own favor. I’ll leave you with the mantra of the Great Depression era: Use it up, wear it out, make do or do without.