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Securing one’s financial future should start early.
Even as a student, you have the ability to influence your financial standing when the time comes for you to become independent. You are actually in the best position to set the foundation of your financial future so your actions today can either give you a boost or give you a bit of a setback.
A number of factors are at play that can affect your financial standing as a student. You might not be thinking about health insurance and investments at the moment because you are most likely getting support from your parents, but what should be considered are student loans and your personal spending.
To serve as a vital piece of financial education for college students, this guide can help you forge a bright financial future.
What really is financial security and why does it matter for students?
Financial security is the state when you do not have to worry about whether your finances can cover your expenses. Of course, this should not be likened with a situation when one does not care about his or her financial obligations and freely spends beyond his or her means. You become financially secure when there is no stress in meeting one’s responsibilities, and still, have the means for recreation and for savings.
As a college student, your actions today can affect your financial security in more ways than you can think of.
Why should you start working on your financial security as a student?
Even as a student, your actions play their part in your financial future. For now, your expenses are most likely covered by your parents. But when you graduate and start working, you should be able to stand on your own two feet and on your own salary.
Your actions today, as a college student, can influence your financial security by the time you become independent. You can either be at a disadvantageous position where financial obligations are looming, just waiting for you. Or, if you are able to work on it, you can be in a situation when you already have savings and investments, and little to no liabilities to think about. True enough, your decisions now have an impact on your financial standing in the future.
How can you be financially secure at a young age?
There are many factors that affect your financial security. Some of these are within your control, but some of them are not. If you are fortunate enough, your parents have your educational needs secured through educational investment, or by simply having the means to afford it.
Meanwhile, a huge chunk of college students need to take out student loans. Some also choose to work on a part-time basis or have some sort of business just to afford their educational needs.
Furthermore, your personal finance management is also at play. How much you spend and save today can influence the position to achieve financial security easily. Taking matters that are out of your control out of the equation, you have the power to secure a bright financial future. Here are 5 things that college students can do to attain financial security:
Recognize your means and live below it
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The first step in ensuring your financial security is to identify your current financial status. You should know how much financial resources you have. As a student, you are tied to your allowance unless you have part-time employment. So take note of how much your allowance is and having a second or even a third channel of income doesn’t hurt as well.
After you have identified your finances, you should then make sure that your expenditures not going over what you can earn, but lower. While most would say that if you can live within your means, why not? But a more financially-wise move is to live below it.
Create a budget and follow it
To make sure that you live below your means, you should have a budget where you will list down all your recurring expenses and it’s a good idea to add some possible ad-hoc expenses too. Once you do that, compare it with your finances and see if your expenses fit within your means.
If you go over budget you can easily see which parts of your expenses you can reduce. This budget won’t work, however, if you do not follow it. So make sure that you religiously abide by your budget.
There are many budgeting tools available online that you use to efficiently do accomplish this.
Save as much as you can
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Have a saving mentality. This will guide you in making financial decisions. If your mindset is that you place saving as a priority, you will do so as much as you can. You will always think about finding the best value for money when you spend, and you will avoid spending unnecessarily.
When you save, you will have money that you can use for having fun and for emergency purposes. You can also use the money to invest now and grow it even more.
College students are in a sweet spot for saving. For the most part, they’re still not responsible for monthly bills such as electricity or rent, and their money still comes from their parents. So take the opportunity and save.
Manage your credit wisely
People have mixed feelings towards credit because it can be misused. You can get a credit card at the age of 18, the usual age when starting college. At this time, having a credit card can be very risky. But if you are financially disciplined, you can use it to your advantage. Of course, it is still best to only use your credit card when absolutely needed, or when it is more a wise move to do so.
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Finally, you should also take into consideration taking your financial security to the next level by getting yourself insured. There are lots of insurance plans that can help you ensure a bright financial future. Consider getting health insurance and educational plan.
Your premium would be a lot cheaper as compared to how much you would have to shell out in case the need arises. Starting on a retirement plan this early can also allow you to enjoy huge benefits when you get older, so it is wise to reach out to insurance professionals to know more about what insurance plan is best for college students
Secure your financial future today
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It is undoubtedly true that your financial future is affected by your actions today, even if you are still studying. You have the power to push yourself towards financial security. Again, college students are in the best position to create a strong foundation for their financial future so it is wise to take action now. With the tips above, you will be five steps closer to financial freedom!