As a student, you most probably have a part-time job and it is most probably not the best paying job there is. That being said, you need to know how to manage your money if you want to be able to survive with your hard-earned money while saving some.
Making little money (I’m just assuming since students don’t usually have the best jobs), spending it and saving it can seem like an impossible task, but, rest assured, it is achievable and here’s how!
1- The 50/50 rule
A classic that’s taught to children as soon as they’re of age to own some money, but often forgotten as time goes: save 50% of your income and spend (or you can) the other 50%. Let me put this simply. Let’s say you’ve just got your bi-weekly 600$ paycheck. That would mean that you have to save 300$ and are “allowed” to spend 300$.
Please note that it is just a BASIC GENERAL idea. Go with your needs! The more you can save, the better. If you can do 80/20, 90/10 or even 95/5 (because let’s face it, 100/0 is truly impossible) do it. The more you save the better. If you someday want to buy a house, a car or have an unexpected expense (for example, a car repair that can’t be avoided) you will be grateful and proud of your hard work. Also, this pretty much only works when you have zero to minimal responsibilities; the more responsibilities you have the more you have to pay and unless you’re making millions, you won’t be able to maintain this lifestyle.
2- Set up a budget
It should probably be #1 on this list because it is so important, but it is a little more complicated than the 50/50 rule and a budget might contradict it. If you don’t know what a budget is, I’ll get you through the basics: You set up a maximum amount spent (weekly, bi-weekly, whatever your preference is) on all your expenses based on your income. For example, let’s say you set a monthly budget and your monthly income is around 1200$. You spend around 50$ each week in groceries (total of 200$ monthly, your maximum could be 250$), spend 50$ a week for gas (total of 200$ monthly), and so on. Your budget should contain a “savings part”, even if it’s just 100$ a month.
Here, you can find an article from The Balance about The 8 Best Budgeting Apps to Download in 2019 it should help you choose one that fits your needs. Now, if you are wondering why I am suggesting that you get a budgeting app is because it will simplify your life: they’re easy to use and free/at low-costs which makes them perfect. If you were to go to an accountant, you’d spend a lot of money and would have to invest some time as well (i.e. appointments!). I have to point out though that those apps can’t and probably never will replace an accountant, so if you have the time and money it could be a good thing to consult one.
3- Watch out for food expenses
As a student, especially on your first year of college, you might think that it’s a good idea to skip packing a lunch and buy food at your college’s cafeteria. Wrong. It could be a good thing once or twice a month if you skipped your alarm in the morning or you just didn’t have time to pack a lunch, but not only is it unhealthy (usually); it probably will ruin you overtime.
Let’s put it this way: Say you have 1000$ in your bank account (for the sake of the example, we’ll suppose you don’t have an income, since it doesn’t really matter) and you spend 20$ per day at your college’s cafeteria. Multiply this by 5 days a week, it makes 100$ a week. Having no money left after 10 weeks (2 1/2 months).
Now, in my example I said that wether you have an income or not doesn’t matter. Here’s why. Even if you have an income, you still spent 1000$ for food in 2 1/2 months – money you could have spent somewhere else in the future (i.e. saved).
4- Invest
Once you saved a little bit of money (you really don’t need much!), I really recommend starting to invest. I won’t go in details for that one since there will be a post about investment soon enough, but there are many ways to invest your hard-earned money. Buying stocks has always been a popular choice but there are many other ways to invest. Again, more details in another post.
5- Ensure you pay the right taxes
As a student and part-time worker, you’re entitled to “special treatment”. I call it that but it isn’t anything like it, except that you usually receive your income taxes back.
For more details, you can discuss with an accountant (or buy a recognized income taxes software) and they can help save as much money as possible!
There are many other ways to save money and those presented above were the most popular ones. Watch out for future updates for more tips!
Broke Pupil 