Personal finance is one of those nasty pieces of adulting most of us like to forget about once we finish signing this month’s rent check.
And millennials aren’t the only ones who feel this way. A recent study from George Washington University found that about 70% of American adults are “financially illiterate,” which in this study meant they were unable to successfully answer questions about basic finance (you can read/listen to more about this study here at Freakonomics.com).
So how can we get more on top of personal finance? Budgeting is a great place to start.
1. Download an App…
Apps like Mint can help you make (and stick to) a budget straight from your iPhone. The app will let you make a monthly budget based on your income and your expenses. You can use Mint to set financial goals, track your credit score, and track your bill payments.
2. …Or Do Things the Old-Fashioned Way
Write our your expenses for the month (rent, internet, phone, groceries) and subtract them from your monthly income. With what’s left, you can save money for whatever you want (restaurants, going out, clothes, etc.). Make your budget categories a little bit generous rather than a little bit restrictive. If you’re comfortable with you budget the next month, you can think about being a little bit more restrictive.
3. Think About Your Biggest Expenses
If you owe $4,000 a semester on your tuition, and that’s your biggest expense, keep that in mind when you’re making your budget. If you have a $300 car payment to make every month, keep that in mind before you sign that lease for $500 a month. Sometimes, it seems feasible to take a $1,600 spring break…until you do the math and remember that you need to save an extra thousand dollars for that internship program you wanted to do this summer.
4. Make Sure Your Budget Includes Savings…
No matter your financial situation, you need to be saving money for something. Student loans. A new car. An internship abroad. An emergency. Even if it’s only $25 a month, try your best to add a little bit of money to your savings account with each paycheck.
5. …and Start Saving for Retirement
This is the most unsexy financial advice ever, but it pays to get ahead of compounding interest when you’re young. More than one financial advisor has told me to open a Roth IRA, because contributions are taxed at the time you make them, instead of when you take the money out of the account after you retire. You can open a retirement savings account at your bank, or you can open an account online. Your school might have a money management center or another financial resource program that can help answer more questions you might have on opening a Roth IRA.
6. Figure Out What it Costs to Take That Vacation You’re Dreaming About
So you’ve always wanted to visit Mexico. Or mountain climb in Nepal. Or shop in Paris. But you’ve never been able to afford that trip…or can you? Once you start budgeting, you might learn that taking a vacation is a more doable than you might have previously thought. If you’re caught up on school expenses and rent, start saving for that vacation you’ve always wanted. After all this hard work, you deserve it!
7. Ask for Help
If the idea of even downloading the Mint app or writing out your expenses makes your stomach flip-flop, you can always seek advice from your school’s money management center (Utah students can get financial advice here). I like to get financial advice at the U’s Personal Money Management Center because I feel that it is less biased than the advice I get at my credit union, since its livelihood depends on customers such as myself opening and maintaining accounts.
And there you have it, collegiettes! The next time you have a spare hour or an empty Sunday afternoon, why not tackle your personal budget? Promise you’ll thank yourself when you can pay off your car or take that sweet vacation you’ve been dreaming about…if anything, at least you’ll probably have books covered this semester.