Financial Tips for Every College Student

Anirban Chakroborti 

As educational institutions gradually reopen across the country, many students will again be returning to their college towns, and their ‘broke’ lives – a common euphemism used casually across the internet and social circles, to tell a deeper truth - financial struggles that have come to characteristically define college life for most students. While the stereotype has percolated over the ages, the current generation of students exhibit a more prudent attitude towards money. As college life no more resembles the image of loaned teas at the canteen, we bring you five easy ways to be financially responsible and comfortable as a student:

 

1.      Watch Your Spends – Especially with Digital Wallets

 

An age old advice that is ever relevant, it is important for students to analyse their spending habits and distinguish between needs and wants. With multiple social scenarios being a natural for college students, it is essential to avoid considering others’ views on their expenditure. Digital wallets such as GPay and PhonePe, have been designed for convenience, often making it difficult to keep track of small spends throughout the day. Setting a daily spending limit and consciously keeping track of transactions is a way to control the usage of these wallets. Another alternative would be to switch to cash and avoid using digital wallets as much as possible.

Under the very category of spending, it is also necessary to avoid debt under any circumstances.

 

2.      Utilising Rewards and Offers with Caution

 

While earned rewards and offers are often very helpful for buyers, especially when they are trying to save money, these are often designed as marketing tools to draw customers to a store. When offered rewards and offers with a deadline, it is important to decide if the product or service is a necessity at that point of time. Using every offer coupon or user reward often drains money on products and services that are by then availed to an excess.

 

3.      Dividing Money is Saving Money

 

Even with cautious saving efforts through watchful spending, holding onto money is difficult when only one banking account is used for both spending and saving. Students, especially when living away from home, need a financial reservoir that is also accessible in case of any emergencies. Hence, it is best to have two banking accounts - with one account being for frequent transactions and the other for saving. When living alone far from home, it’s advisable to open the account for transactions in the city of residence. However, opening more than two bank accounts is unnecessary and would incur more loss, with each bank levying an annual service charge for the accounts. A rule for saving, as mentioned by Harold Pollack of the University of Chicago, is to set aside at least 20% of one’s income.

 

4.      Work is Good for both – Career and Finances

 

Working part-time or finding an internship with a stipend is often not just a way to learn more, but also provides a way for students to earn money for their work as they develop in the industry. An additional stream would imply increased savings, along with a slight or reasonably proportionate increase in the spending limits. After all, the point of all these efforts is to live a reasonably comfortable college life.

 

5.      Protect

 

Though not directly pertaining the duration of college education – setting aside money as security (or protection), in the form of insurances, is often a good measure to leave the saved amount untouched in case of most predictable emergencies. While many life insurance policies also allow people to access the compounded amount in case it hasn’t been utilised, starting out young often provides one the chance of availing a smaller premium amount more suited to a college student’s earning potential, or allowance. On that note - insurance cum investment plans aren't the best, and equities are not the place to start as a beginner. Talking to a financial advisor and educate oneself through multiple online sources. Funds are safer to start and low-risk funds are better for long-term investments.

 

Finally, as you devise the spending limit for the day with the idea to at least set aside at least 20% of the total monthly allowance or earnings, hopefully the ‘broke’ stereotype will become a passé to even you.