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Student’s Guide: Securing Your Financial Future

Money is usually the top concern of most people in the world. Everyone is worried about rent or paying off their rent. As a student, this may not be an immediate concern for you. But it is something that can make you miserable in the future.

To make sure that finances won’t be a primary cause of stress in the future. You should start securing yourself now. Even as a student, there are things you can do to make sure that you are in a better financial position when you graduate.

Limit credit card debt when possible

As a student, you want to avoid as much debt as possible once you graduate. Although some like student loans cannot be avoided, there are certain kinds of debt that you can prevent.

In the United States, a third of college students already have more than $1000 credit card debt. One of the main reasons for this is that students are often fooled by the supposed freebies that they get. Many of them don’t realize that the drawbacks far exceed the temporary satisfaction they get from giveaways. Credit card debt is a terrible thing to have because the interest is often quite high.

Fortunately, it can be easily avoided. You just have to be especially careful with your spending. If you can’t afford to pay something with a debit card, then it’s probably not a good idea to use your credit card. Aside from that, make sure you shop around the market if you are considering getting a credit card. Weigh your options first before getting a credit card, and make sure you have a plan on how to pay it back.

Start working on your emergency fund

One thing that students, and even graduates, don’t often think about is their emergency funds. These are similar to your savings, but the main difference is that you use it when you have absolutely no choice. Having emergency funds can be a huge benefit because it means you have money to spend even when you become homeless or unemployed.

Around 28 percent of adult Americans don’t have emergency funds. On the other hand, a quarter has funds but not enough to cover three months. To keep yourself secured, you should have enough savings that can cover three to six months of expenses. This should include rent, food, and any debt that you need to pay off.

Securing your emergency fund is an important step to financial independence. Many only start saving when they start working, but you can actually do it as early as now. Students can set aside a certain amount of money. Once you have enough emergency funds, you can actually start taking it a step further and consider other financial goals such as saving up for retirement or investing.

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Get into investing

If you want to passively grow your money without having to work too much, investments are a good option. The interest in bank accounts cannot keep up with inflation rates, which is why many people turn to investing. It is a way to make sure your money doesn’t sit and can actually earn profit in the future.

Investments come in various forms, and the ones with huge returns require huge risks as well. Students may be a bit wary of getting into those because of the potential losses. However, there are certain investments that have lower risks but also lower returns. Money market funds are examples of this. Although the profit is low, it will still be higher than bank interests.

If you are feeling daring, you can try your hand at higher investments, but make sure you complete your emergency funds before getting into investments. To help you decide on what kind of investment you should get, consult with a licensed financial advisor to determine your investor risk profile. This identifies how much of your assets to allocate based on your personality and background.

Live within your means

A common mistake with students is overspending. College is usually seen as a time of having fun and discovering yourself. In the process of finding out what you want in life, you may end up spending more than what is reasonable. Whether it is for stress relief or peer pressure, college students tend to overestimate what they can actually afford.

Most students only ever consider tuition and books as their main expenses. What they don’t realize is that their day-to-day spending is just as responsible for their financial position. A lot of them spend so much on eating out every week or buying expensive coffee every day.

You have to learn to budget as early as now to secure your future. It is a great habit to have, and this can translate to financial independence in the future.

It’s important to develop a healthy relationship with money. Don’t just think of it as a source of stress or a source of pleasure. This can cause you to use spending as a way to cope, which in itself can ruin your financial position in the future.

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