Managing your own money when you’re finally out on your own can be intimidating. Follow these four steps to control your money.
Even after all the personal finance lessons we get from our parents, managing your own money can be extremely difficult…and scary. Spending all your money too fast doesn’t mean you can’t buy more stuff, it might mean you don’t have a roof over your head.
Today’s essay is by Kimberly Clermont, a student at the University of Arizona. She shares the four steps she learned to manage her own money before leaving for college.
Check out Kimberly’s story and please share on social media. The most-shared essay on how parents can teach their kids about money will win our $500 personal finance scholarship, announced August 31st!
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Managing My Own Money…Poorly
Money. I am no good at saving it, but am rather an expert on spending it. There’s no way to sugar coat the fact that I love shopping for just about anything that I just have to have, and will do it within the blink of an eye. That is one thing I do extremely well: treating myself (at the expense of my bank account, of course).
Finally done with the years of forced attendance at school, I am also done with free schooling. That is something that I have had a rude awakening to as I took out my very first loan at a pretty hefty price for my first year attending a university (lets just have a moment of silence for being in debt before actually attending school).
My Four Steps to Managing Your Own Money
There are two short days before I am on my own financially, and in every other aspect. That also means that there are just two short days for me to master the art of saving money, and leave behind my bad habits of being a hasty spender. So here are some savvy saver tips I have learned from my parents along the way:
- Plan it out! Google sheets has become my best friend recently. It has helped me learn the ways of planning out my money and what I need to (not have to) spend it on. Personally, I started out with the total of my loan. Then, subtracting the tuition and all the other expenses needed to attend the school.
What I had left was my personal expenses for the entire school year. Breaking down the different categories (groceries, entertainment, ect.) I planned out, monthly, what I am allotted to spend in each category. This is going to be a major life saver for me because it will allow me to keep on top of my finances while being in school!
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- It’s okay to treat yourself here and there. Going from reckless spending to a savvy saver is not going to happen over-night (I know, I wish it worked like that, too). But, reality is that it takes time to kick old habits. So, my mother told me that one way to help is to plan out a little splurge for yourself each month. It could be anything from getting a massage during finals week to buying the newest thing on trend, but the key is to budget it into your monthly plan!
What my mother told me was most important, was to not splurge if the budget does not allow you to. Sticking to budget will be the hardest change, but allotting a mini splurge each month will help you fuel your spending habits without breaking the bank.
- Get a job! Maybe even get two if your schedule allows it. Upon research and planning (on my Google sheets, of course!) I found out that, by getting a job, working around 16 hours a week, and saving every paycheck, I would accumulate around $25,000 in savings! In order to make saving every penny of every paycheck work, I had to plan out how I was going to spend my loan money- dividing it into tuition/ mandatory school payments and personal expenses that included monthly spendings on things from entertainment to groceries.
By putting your paychecks into savings you’re allowing it to (ever so slightly) accumulate interest, thus increasing your savings by just that much. Another plus about building up your savings is that, once you’re graduated and taking on the daunting task of making payments on your loan, you can take a part of your savings and tackle off a good chunk off your debt (and decrease the amount of years you’ll be making your payments. Another bonus!).
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- Think long term. It is never too soon to start planning out your life financially. Make yourself a 5, 10, or even a 15 year plan! This definitely is easier said than done, especially if you’re going into college undecided about what you want to do with your life! Having an ideal career in mind or not, everyone can start to plan things out (and eventually add on!). For me, I know that I want to be a journalist.
So, I started out by researching the average yearly salary for my career choice, and if you’re undecided research the couple of possible careers you would like to do. From there I divided the yearly salary into months and subtracted the possible monthly loan payment I would be making. This left me with the money I would have left over to pay rent, groceries, ect. In doing this, I realized that (very sadly) it was way out of the picture for me to live in New York City right out of college, but it also helped me realized that my dream NYC apartment life was not completely out of reach!
Becoming a Financially Independent Adult
Within a couple years after college, it is in reach for me to make the move to the city that never sleeps. Don’t just plan out the now, but also the future. It will shed some light on what you can and cannot do right out of college and you’re future, not-so-clueless, graduate self will thank you for it.
My parents have taught me so much these past couple weeks about finances as I have started to dive into the life of a financially independent adult. Their tips and lessons have opened my eyes to this crazy financial world and have taught me that it will be tough at times, but the one thing I need to always remember is to stick to the plan and things should work out.
I want to thank Kimberly for her essay on the four steps to manage your own money. Be sure to support Kimberly by sharing the article through social media and check in August for the winner of the personal finance scholarship.