Finance 101: Money Habits for the Girl Boss

We may not feel super prepared when thinking about how to best manage our money in order to live a comfortable, successful life – and even more so if we want to make our wildest (and possibly expensive) dreams come true. Here are some of the basic tips for what we can do now to form a good financial foundation for our futures:


1. Establish Credit

Chances are, you won’t be able to make bigger purchases – like a house or a new car – with one lump sum of cash. In order to prove you are able to be trusted with a loan to buy the more expensive necessities, the companies and bank will look to see you have a good credit history. One of the best ways to build credit is by having a credit card and using it wisely – aka making payments on time and in full. Don’t have a card yet? Have no fear! It can be harder for students to open a card due to a limited income and virtually no credit history. However, there are student credit cards available that – while they have a high-interest rate and low spending limit – serve as the perfect starter card to build credit with. Be sure to do your homework about the different cards you can apply for, so that you know the details of the card and can choose which is best for you.


2. Track Spending

During this weird transition time where some purchases may be bought with your own money and others with your parents’ money, it can be hard to realize just how much you spend on certain things. Once you are completely funded by your own hard work, you may realize that you can’t afford to live the lifestyle you did when you had help from your parents. To prepare for that day, begin to track your purchases now. Divide your expenses into different categories such as ‘beauty’, ‘groceries’, ‘utilities’, etc. As you make purchases, note the monetary amounts of each item within the category it belongs. Once a month, add up all the purchases within a category to find out how much you spent on each category. As you compare totals for each month, you will start to see a pattern on how you spend your money – as well as some areas you may be able to cut back on.


3. Create a Budget

This is a common suggestion for people of all ages, but we may never have needed to put it into practice before. Making sure you aren’t overspending and are saving some of what you earn is important to consider in your budget. When first sitting down to create one, it may feel a bit overwhelming – like you have no clue where to even start. To get a better sense of how much you should spend on different kinds of purchases, you can use the data you gathered when tracking your spending to see what your habits are. Start with the exact, non-negotiable payments (rent, tuition, etc) and subtract them from your monthly income. Then, determine maximums of how much you would like to spend on other necessary purchases, such as gas and food. When coming up with these maximums, use a ratio of your current spending habits relative to your income. The money you have left after planning of those purchases can go toward savings and pleasure. Also, don’t feel like you have to spend the maximum each month. Spending less than budgeted means more in your savings for you to enjoy later!


4. Pay Off Debts

 As college students, this one may seem a bit daunting. However, it must be faced or it can turn into a slippery slope. The big problem with debt is that over time, interest is added to the money that is owed, so you end up paying more in the long run. Typically, interest is calculated at various times during the year by taking a percentage of the money you owe and adding that amount on top to make a new, higher total of money you must pay back. This concept can be especially tricky with credit card use, because your credit limit may allow you to spend more than what you earn – a deal that prevents you from ever getting ahead. The best advice to follow is to only spend what you know you can pay back, and if you do have debt, pay back as much as you can each time a payment is due.


5. Save Early and Save Often

If you are going to take away anything from this article, let it be this section. Although it isn’t always possible, it is a common rule-of-thumb to save 20% of your monthly income – especially when you are young. The figures are staggering when looking at how much money can grow when it is put into an account and left to accumulate interest for years to come. There are many options of various kinds of accounts you can put your money in. During the younger years of life, it is okay to take more risk by putting money in a mixture of stocks and bonds. These have some of the highest return rates among any investments and accounts. To play it safer, putting money into a CD or savings account will still give you interest on your money – although not as much – but without the risk. You will reap the benefits of saving your money now when you want to make bigger purchases, either in retirement or even if you run into a hard financial time.


Our futures are closer than we think. In just a few years, we may be on our own to figure out just what adulting really looks like – especially how working, living and spending all fit together. By making smart moves now, we can be well-prepared to make the boss-babe lifestyle we have always dreamed of a reality!