One thing they don’t really teach you at schools or even in college is how to manage your money. Sometimes it’s a ‘locking the stable door after the horse has bolted’ scenario. You start your student life or adult life and realise your money must go much further than it does. Below we discuss why you should budget and provide a few little tips to help you do this. The first reason is…
You’ll have more money in later life
Every penny you save will count later on. You can make the saving work for you by investing it. This is thanks to the principle of compound interest. When you invest your money, not only do you earn interest on the investment, but also on the interest itself.
You can pay off debt easier
You could have a student loan or other debts, and if you can budget your money, you can free yourself of these earlier. You just need to squirrel away a little money regularly and put it towards your debt.
You’re preparing for adult life
You’re going to have big expenses later in life. You may want to buy a home and/or have children. Learning to budget and save prepares you for these expenses so that when they arrive, they don’t feel such a heavy financial blow.
How to budget
To make your money go further, which is crucial when you’re young, above, you need to budget. Here are some tips on how:
Establish your income and outgoings
This is your starting point. Knowing how much money you have coming in and going out will allow you to decide how much you can spend. Once you know, you can start working out your budget by dividing the money you have to spend by the number of weeks in the term (or in the month, if you’re not studying).
You may find you haven’t got a great deal to spend. You’ll need to boost your income or spend less, or both. You may decide to cancel certain subscriptions, such as Netflix or your gym membership, if you’re not making the most out of them, and seek other options.
Look for the best deals
You may be spending more money than you need to on your internet bill and other regular expenses. Review your current deals and compare them with the broadband deals on Cable. You could be paying less for the same service. Remember that if you’re sharing a flat with other students, the chances are you’ll all be using the internet to study, so choose a deal that offers a download speed of at least 10 Mbps per person.
Look at your energy bills, mobile phone bills and any other regular expenses, including your weekly or monthly food shop. There’s potential to make savings on all.
When you’re budgeting, it’s important to track your expenses and review them each week so you adapt it if necessary. Budgeting apps can help you track them. In the age of the contactless payment, it’s easy to overspend and you might find you’ve gone over your budget. Alternatively, you might find you’re spending less than you budgeted for and have cash floating around you didn’t think you have!
Read more about how to save your money here.
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