It’s easy to spend in college. It’s easy to rack up debt and not give it a second thought. You’re already spending insert crazy large amount of dollars here, to go to school a year, what’s a few dozen orders of take out a semester going to really do to your account balance?
A lot. The answer is a lot.
Truth is, most college students aren’t taking their money seriously because they think that fiscal maturity is something they sort of arrive at post-graduation. In reality, being mature and responsible in your finances is something that should be practiced from the moment you earn your first dollar.
When you walk into Walmart or your local Target (pronounced tar-zhJAY), do you find yourself having a conversation like this one with yourself?
If so, you’re not alone. I remember my days of walking into trap-marts, naive and without a solid plan. I’d splurge on the ice cream and make-up sections, then walk down to the small ethnic hair-care section behind the rows of normal hair-care products, knowing that, in moments, I would give up my debit card’s innocence to any register willing to swipe it first. And when my online pizza order would fail to go through due to the now $4.27 in my account, I’d sit on the floor—hungry, with my setting spray in hand—wondering where I went wrong.
Now, I have no regrets when it comes to my food habits or beauty routine, but I know for sure that the way I treated my bank account was wrong! And I can already hear many of you shouting a good “amen,” to that, because you’ve all sinned against your hard earned wages in ways of your own! So, if you’re tired of putting up the “broke college student,” front, and ready to be freed from the burdens of your old spending ways, here are some tips to help bring some restoration to your bank account!
Tip #1: Spend your money before spending your money!
In other words, budget. This is a crucial step to the healing process. As aforementioned, I’d often go out to do my shopping without a solid, written plan of what I absolutely need to purchase. Yes, I had a mental list, but having a written plan helps to ensure self-control.
At the beginning of each month, or however often you spend money, you need to sit yourself down, grab a notepad and pen, and plan! In order to do this, you’ll need to know the exact amount (or at least a close estimate) of how much money you’ll be bringing in for the month. Next, you’ll need to have a general knowledge of where your money goes each month (think about the stores you shop at, the products you buy, and subscription fees).
Now you can begin organizing your money into categories. It’s best to start from most dire to, “I just want to enjoy life,” because if you use your electric bill money to cover the cost of a fun-filled weekend, you won’t be enjoying anything when you get back to your apartment.
Here is an example of how you can organize your categories:
- Treat yourself
Underneath each category, you can write in the name of the payment or item for that category, along with its cost. Next, total up the costs in each category and then add up the final total of each category. When you’re done, you’ll find the amount of money you should expect to spend on your life for that month! You’ll have to do this every month if you want change.
Tip #2: Use Cash…and Envelopes!
So I don’t know about you all, but I almost never have cash! Ever since starting college, I’ve become so accustomed to swiping all sorts of cards from my debit card, to gift cards, to my student ID. But if you want your bank account to grow, you must learn to limit your card swipes. Swiping is the enemy of change—literally!
Studies have shown that people actually spend 12-18% less money when they use cash, as opposed to a credit or debit card! Why is that? Because you aren’t going to buy an item that is $24.99, when you only have a twenty in your hand, silly! But when you have a card in hand, there is a greater inclination to spend without thinking twice. So even though it takes an extra step, take the time to withdraw a modest amount of cash from your bank account each month!
And a great way further discipline yourself with cash, is to designate your cash to certain envelopes. This is something that I’ve actually been doing for a few months and it has changed the way I spend (as well as how much), tremendously!
I usually keep about three different envelopes: my pizza envelope (fave), my church envelope, and my miscellaneous spending fund.
It would probably be smart to keep at least a envelope for groceries just to get that out of the way, but besides that, your envelopes can go to whatever you feel is important to put money aside for each month. I keep a church envelope, simply because I believe in tithing (giving) and don’t want to forget to do that. As for my pizza envelope and misc. Fund, I know that if I do not check myself, I can get reckless with how much I spend on pizza or other random items like ice cream, so having an envelope for those things has more to do with self control, rather than devotion.
Tip #3: Watch Your Acct. like a Hawk!
Check your online bank statement often! My bank has a money managing tool, called FinanceWorks, that allows me to easily organize my spending.
I’ve been using this tool a lot, and you should too! If you do it often enough, your account balance will start to become internalized.
One day I went to the atm and requested a printed receipt. When I looked at the receipt, I noticed my account balance was pretty low. My first thought: fraudulence!
When I got home to check and manage my account, I found that someone had indeed withdrawn money from account, and the financial tool had labeled the expense as “groceries.” Aha, I’ve caught them in their tracks! Some weirdo used my money to buy groceries, I thought. But when I looked closer at the name of the Withdrawer, I realized it was the name of a company that I had purchased free coconut oil from about a month prior. There was no tom foolery going on on my account! The only fool was me! The company had charged me a fee for an automatic subscription that I forgot to cancel after receiving my merchandise.
If I hadn’t been paying close attention to the money in my account, I may not have noticed quick enough, or at all, that I was charged such a hefty fee. But since I was keeping up with my transactions, I was able to call the company and receive my refund for the charge.
Which brings me to Tip #4: Get rid of Stuff You Don’t Need!!
If you you can live without it, do.
- Useless Subscriptions (Honestly, if you’ve had your Netflix subscription for three months and haven’t finished a season of Grey’s Anatomy, I think it’s time to put your $10 towards something more fruitful)
- Spend less money on alcohol—or even give up drinking. Your liver will thank me soon.
And . . . saving the best for last
Tip #5: Give your savings account some love
Hey, remember how I told you to spend ahead in tip #1? Yeah, this includes saving as well. In fact, add that onto your list of categories right now! At the beginning of each month, you should throw a portion of your earnings right into savings. If you can do this, put HALF of what you make into savings. This is so important.
Dave Ramsey, a money expert, best selling author, and author of Financial Peace University, calls this “baby step #1.” Ramsey suggests making it a goal to accumulate $1,000 worth of savings in your first few months of financial restoration. This is because you never know when an emergency will happen—and trust me, emergencies are bound to happen in your life time. But at least by having this step completed, you’ll have one less thing to stress about when small disasters do strike because you’ll have your handy-dandy pile of emergency money to turn to!
Oh, and remember how I told you to carry cash in tip #2? Well, now that you’re doing that, you’ll likely start to see change! Get into the habit of depositing loose/left over dollars (or even spare coins) into your savings account. It might look silly at first, but in the long run it’ll add up
If you’ve read this far, bless up—your season of change is on it’s way. I truly hope that you’ll take these tips into account and actually make strides towards financial maturity. I’ve been practicing every single one of these steps and it has contributed to my own personal and financial growth. As college students, we don’t have to live with the stigma of being broke, or even live with a lifetime of debt post college. Getting into the habit of saving and making wise choices with your money early on can help mitigate debt in the future!