Managing money when you’re studying full-time or even part-time can seem like a juggling act of bills, fees, textbooks and waiting for the payday that always seems like it’s just a little too far away.
But you don’t need to resort to 2-minute noodles for all three of your daily meals to make your study and your money work for you.
Give yourself some credit by getting none.
There’s some wisdom in that statement. The number one way that students get themselves in financial trouble isn’t the cost of living or the cost of tuition; it’s over-extension of credit cards. And it’s rare that credit card use is linked to actual living costs.
When you have a plastic card that gives you access to a trip to the Gold Coast with the family or those shoes that you “simply must have”, it’s not hard to see why the average Aussie holds $3400 of credit card debt that is costing at an average of 17% in interest.
Cut up the credit card and use a debit card linked to your savings account instead. You’ll save up to $500 in account fees a year as students often qualify for fee-free accounts. Plus, you’ll avoid running up debt that takes most Australians around 43 years to actually pay off. Add mortgages, car loans and the many personal loans we tend to accumulate over a lifetime and you’ll appreciate cutting that extra $7000 a year of debt maintenance out of your budget.
Set a realistic budget that includes your lifestyle items.
It’s not the power bills, rent or car rego that sets us back. It’s the double-decaf-soy-lattes with a cherry macaroon that nukes your bank balance. While you might think that coffee and cake is good value because of the free WIFI that you get at the cafe, it’s adds up to almost half of the amount most students spend on groceries each week to treat yourself daily. So when the car rego bomb drops or the quarterly power bill arrives, what you’re experiencing isn’t “bill shock.” It’s cafe shock!
While you might deserve a treat, so does your budget. Take a flask of espresso from home. Make your own cakes and slices. You can still have your coffee and cake. It’s just that it doesn’t need to cost you $50 a week to have it.
Your small change will save you on those lean weeks.
Make a habit of emptying out your purse or wallet of all that loose change at the end of each day. Unload all the silver and gold in to a container or piggy bank and you’ll have that extra few dollars the day before you get paid for the milk, bread or bus fare when you really need it.
Most of the expenses we have in that last few days before we get paid are basic living expenses. Public transport, lunch, dinner, or perhaps a bit of credit on your pre-paid mobile phone.
Putting all your spare change aside at home means you have a pool of quick cash to handle those small things when you need them. It’s not uncommon to find that a change box at home can contain hundreds of dollars when left alone. You’ll appreciate that cash when you most need it!
Pay yourself first.
This is a great old trick that economic and financial commentators from Ross Gittins to Scott Pape have advocated. Before your groceries, before your bills, before your loan repayments, set aside a portion of your income to pay yourself. Paying yourself is simply making sure you put money in your savings before anything else.
It’s hard when you know that cash could go towards paying off loans, buying something nice or even to pay forward a future bill. But paying yourself first means you are putting your future first by investing in yourself. And let’s face it; if you pay all those other things first, you’re not as likely to then take a portion of what’s left to put in your savings.
Pay a little today. Save a lot tomorrow.
You’ve never experienced satisfaction quite like getting a $0 bill from a power company. By paying a little each time you get paid to your regular utilities like power, water, phone and health insurance you are saving yourself from some massive shocks down the track.
If your phone bill comes in at $100 per month and you get paid weekly, you can pay $25 towards your phone bill every week and never have to pay out that whole $100 in one amount again. One big monthly bill can blow your budget for a week when you don’t spread your payments out. Imagine what a difference that will make when your average quarterly power bill is over $500.
Managing your money as a student seems to be all about common sense. A few small changes to how you manage your money each week can make a big difference to your bank account immediately and over the long term. Your stomach will also thank you for not eating noodles and tomato sauce for dinner every night.