For many young people, leaving home and starting college marks the transformation into adulthood. Being out in the real world may come as a shock to some. While you may have relied on your parents to pay for food and gas, you are now on your own to discover what being financially responsible is all about
Tuition costs have been on the rise over the last few decades making it even more crucial to understand how to manage your finances responsibly.
Want vs. Need
One of the hardest lessons to learn when managing your own money is determining what you want versus what you need. Do you really need another pair of shoes? Is that gourmet muffin and vanilla latte every morning really necessary? Purchases like these can eat a hole in your budget and leave you short on money you need for essentials, like food, gas and rent. It is important to live within your means, and that entails not buying things that you really don’t have the money for.
Create a Budget
Creating a budget will show you exactly how much you have to spend on what. Start by writing down all of your monthly expenses. Next, allocate your funds to ensure that you are able to pay all of your expenses for the month. With the money that is left over, decide how much is needed for food, gas, and entertainment. Make sure that you keep track of your budget, as it may change from month to month with new or different expenses.
Tips for Frugal Living
If you enjoyed wearing expensive brand name clothing in the past, now is the time to learn about spending money frugally. You may want to consider shopping at a thrift or discount store. There are many discount stores that offer brand name clothing at a reasonable price. Talk to your roommates or friends about buying bulk items, and them splitting them. You can learn to cook simple meals for yourself. This will save you a substantial amount of money in eating out. Make your coffee at home instead of grabbing it at your local coffee bar. Take advantage of various student discounts that are offered around town with your student ID. Walk or ride your bike to campus instead of driving. Not only will this save you gas money, but the money that you would have spent on a parking pass as well.
Get a Checking Account & Credit Card
Apply for a student checking account at your local financial institution. Inquire about obtaining a debit or credit card. Although using a credit card may be scary, it is a necessity in order to build up a good credit score. A SpendSmart student debit card is a good start for teaching financial responsibility since it’s prepaid and has no credit risk. Prepaid cards make shopping online and on-campus easier and more safe. Just be sure to keep track of your charges and to pay off any existing balance every month. Never let a balance accrue on your credit card. You will find it extremely hard to repay the credit card balance in the future.
By living frugal now, you will have the ability to save up the money you need to live comfortably. You may even be able to stash some extra cash away in case an emergency should occur. Living within your means will help you to appreciate everything that you’ve worked so hard for in the future.
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