If you’re fresh out of high school, you know that fundamental life skills like budgeting, banking, and financial planning were never part of the senior year curriculum. Unfortunately, these are the skills that benefit you the most when you’re in college and managing your own finances. For me, the responsibility of handling my money was quite overwhelming, and I was so afraid of splurging or making the wrong decisions — yet spending $40 on bubble tea every month seemed wise at the time. However, people learn from their mistakes, and thankfully I did, too. Here are some ways to handle your finances that worked for me and will hopefully benefit you too!
- track your expenses
I should repeat this one — track your expenses! This is such an important and underestimated tool that helps you make smarter financial decisions. When I started tallying each $10 take-out meal, groceries, and monthly subscription like Spotify, I collected accurate data of where exactly my money goes. There is something about the act of writing down your expenditures that serves as a deterrent to whipping out your debit card for every Sephora sale. Holding yourself accountable for your expenses is a strong motivator in making intentional financial decisions.
- The 50/30/20 Rule
The 50/30/20 rule is probably something you heard your parents briefly mention throughout your years growing up, but you may or may not know how it works. In simple terms, you spend 50% of your budget on needs, 30% on wants, and 20% on savings. Additionally, remember to separate your monthly expenses from the one-off expenditures. If you include your monthly groceries coupled with your expenditure on winter boots, you’re going to end up with an inaccurate depiction of your monthly budget. Now, this might be hard to follow religiously because of different lifestyles and necessities, but it’s a good framework to begin with.
- use a good budgeting app
Apps like Mint and PocketGuard are tools that make the whole process of budgeting easier and less overwhelming for people who are taking their first steps in financial planning. I personally use Mint, and it allows me to categorize all my expenses, track expenses on a day-to-day basis, and link my checking account to my phone so I can monitor expenses on the go! Budgeting apps also simplify bill payments and transactions by sending reminders and alerts in case of large withdrawals.
- reward yourself!
Planning for your financially independent future is hard, and you need to be proud of the effort you are making. College is stressful even without the pressures of trying to save money, and you deserve to reward yourself once in a while. If that $6 iced matcha latte makes you happy and gives you the serotonin boost you need to make it through the day, then don’t think about it, just go for it! Budgeting is an important tool for your future, but self-care should always come first.