The financial picture of a college student is completely different from that of a working professional. If you are a student, you would be majorly dependent on your parents for financial needs and would not be making enough money by yourself. While college time is all about learning, growing and having fun, it is equally important to take these times seriously as these are the steps to your financial future. There are multiple ways how you can learn to manage money while in college such as budgeting, understanding your education loan or getting an add-on card on your parent’s credit card. So, let us understand how you can establish good financial behavior when in college.
Make a Realistic Budget
Creating a budget can be tricky even for someone who is already in the workforce. Budget is not just about adding up the bigger purchases and matching them with your cash inflow. There are many small expenses that can add up to a shocking amount. The same thing can happen when you are in college. Even if you are getting money from your parents, it is a good idea to create a budget and restrict your spending to it. However, this does not mean that you should give up all the fun. Estimate the cost of going to a movie or having a party and include the same in your budget along with other important expenses. Be smart in your approach- getting a subscription to a study tool is more important than that new iPhone you are eyeing. Making a smart budget like this will prepare you for the future without having to compromise much.
Understand your Student Loan
The rising cost of education in India has made it hard for people to get into their dream college but easily available education loans have come as a rescue. Student loan should not be something that only your parents manage; you must participate in finding the right loan after doing research. Remember that you have to pay back every penny that you borrow along with the interest. This is why it is important to find ways to lower the cost of your student loan so that it is less of a burden when you start working. Look for scholarships to fund a part of your education.
Introduce Yourself to Credit Cards
When you start working, you will be approached by many banks for giving you credit cards. To avoid reckless usage and ruining your finances, you can give an early start to your credit card journey by getting an add-on credit card (supplementary card) or a secured credit card when in college. You can get a secured credit card against your fixed deposits. About 80% of your FD’s value could be offered by the bank as the credit limit on your card. An add-on card can be availed on a primary credit card. You can ask your parents to get you an add-on card with their primary card. Both secured credit card and supplementary credit cards have usage and features similar to that of a basic credit card. You can earn rewards with your purchases, get interest-free credit period along with some more card specific privileges. This will help you understand how credit cards work so that you don’t make haphazard usage when you get your first card.
Learn to Save Money
You might think that how would you save money when you are not earning any. However, doing some basic saving should be a priority when in college. It sets a good financial behavior in you for the future. Saving money when in college may be a little different. You would not be saving for buying a new car or a house but for smaller expenses like tuition fee of a quarter, hostel rent, etc. It would be easier for you to save if you make some money on your own by doing summer jobs or part-time jobs. Saving will not only make your education easier on your parents but will also inculcate a good habit in you. You can cut back on unimportant expenses and smartly manage the existing ones. For example, you can buy second hand books instead of new and also sell your old and unwanted books.
Take up a Part-time Job
Nowadays, a lot of college students are interested in working part-time jobs or freelance projects. If you can make time from your classes and self-study sessions, this could be a great way to learn financials. The extra money you make will make it easier to provide for the expenses and at the same time help you understand the operations of a workplace. You may also opt for a paid internship with a corporate wherein you will get to learn a bigger organization and make some money for yourself. The experience you gain will also ease your transition when you actually join an organization after college. Companies would also prefer someone who has some experience over those who don’t.
When you are young, you would want to feel free to have fun. But that is also the time when you are the poorest and have to balance your cash inflows and outflows. Hence, managing your money when in college is more about willpower than skills and understanding. By holding back on a few discretionary expenses, you are not limiting yourself but learning to spend in a more disciplined manner. Good spending habits can pave the way for a better financial future.