In my Principles of Marketing class, we learned about BOP markets this week. BOP stands for Bottom of the Pyramid, since it is no longer politically correct to call these markets “third world.” In these economies, which consist of more than four billion people, consumers spend less than two dollars a day. These four billion people have five billion dollars in collective spending power. My professor, Juan Holguin, is a U2 fan and told us that these statistics make him think of the lyric “What you don’t have, you don’t need.” Unless you are starving, homeless, or in any other way struggling to survive you have no real need for the newest iPhone or even a new pair of shoes.
These principles seemed straightforward and obvious to me, but after talking to a few classmates, I became aware that many of my peers do not view their bank accounts as tools to fund their success, rather a dangerous pool from which they can pull (but not too hard). Saving money is something for their future selves, and being twenty is an excuse to “treat yourself.” I was raised by extremely cheap parents, and we lived off of very little when I was young. When I was in high school, I made a goal to make $10,000 in nine months while going to school and only working part time. I accomplished this, and it is one of my proudest moments to this day. College is a perfect time to make a budget that makes sense for you, and here are some tips to get started.
1. Make a savings account. This tip is an obvious place to start, and will be the foundation of becoming a Fiscally Responsible Human.
2. Set goals. When you have a figure (say, $10,000) in mind, it’ll make it a lot easier to say no to a $5 caramel frappe. Just emblazon that number on the back of your eyelids, and remember what your goal is when times get tough.
3. Stop living paycheck to paycheck. This will take time to save a little rainy day money, but after a couple months you should have some savings. Now, if you are like most people, the goal is to not reach inside that piggy bank.
4. Try the $5 Challenge. An internet craze that started recently is the $5 Challenge. The idea is to save every $5 bill you come in contact with. You accrue a jar of $5 bills and at the end of the year, you can have a small fortune! This all depends on how much cash you use, however.
5. Splurge (a little). Transitioning into a budgeted life is a major key in growing up and it is a lot like going on a diet. You will be unable to maintain it if you radically change your spending habits with no buffer. Splurging at a rate of once a month or so on something less than $30 will not blow the bank, and you will end up with that cute pair of shoes you have been eyeing!
6. Stop eating out! If you have a meal plan, utilize it. It is essentially your kitchen, and should be treated as such. Not only is going out to eat hard on your wallet, it is usually hard on your body.
7. Not all of your income is discretionary! Once rent is paid, and your phone is turned back on, you cannot blow through the remaining balance. A good rule of thumb is the 50-30-20 rule. It states that 50% of your income should be spent on necessities (rent, utilities, etc.), 30% of the leftovers can be spent on manicures and concert tickets (some of those infinite desires), and 20% should be put into savings.
8. Use your student discounts wherever they apply. Haircuts, restaurants, bookstores, and many other places around town will have a student discount that can be up to half off! These deals are to help you succeed, so make good use of that ID card.
9. Waste not, want not. Cheap tricks like watering down soap to extend your shampoo’s lifetime by a week end up saving you extra trips to the store as well as cash. Before you go out to eat, check what is hiding in your freezer. Hot Pockets for the win!
10. Don’t let money rule your life. You can have more fun on a free hike up A Mountain than an Amazon shopping spree. You won’t remember what you ate when you dropped $20 on dinner, but you will remember going to a free poetry slam with your good friends!
These tips will not make you a millionaire overnight, but if you have been running down your debit card’s balance or racking up credit card debt, these little lifestyle changes can benefit your life for years after graduation.