I will hold my hands up to the fact that up until the beginning of this year, I have been oblivious when it comes to my finances. The reasons for this are many, but primarily the fact that I have Dyscalculia (a kind of number dyslexia) and that I never received any financial education while in school. When I left senior school at sixteen, I could tell you a lot about nuclei and make a terrible apple crumble, but I couldn’t tell you anything about taxes or interest rates, or effectively plan a budget. The fact that money management isn’t taught in schools, but that there’s an increasing number of students going to University creates a minefield of potential problems for prospective students who, upon graduating, find themselves with thousands of pound’s worth of student loan debt around their necks and no idea how to manage it.
After completing my first year living away from home and attending university, I’ve decided to move back home to finish my degree. The transfer process was frustrating, but the most difficult part was re-applying for Student Finance. I looked at the numbers on the screen, numbers with more than two zeros, as I pondered how much I would need to live and study from home. I knew I needed to take control of my finances, stop ignoring the numbers, and attempt to truly understand my situation. I took a few steps to improve my finance and tackle my money management fears head on, and in sharing them with you, I hope to help make money management for student life (and beyond!) a little less terrifying…
The first thing I did was to open a savings account and start an emergency fund. This was something I’d been procrastinating on for years – I had an ‘I’ll get to it eventually’ mentality and was under the delusion that I’d be able to save money in my regular checking account. This is basically impossible. A more fool-proof plan was to open a new savings account and set up an automatic transfer every month so that a percentage of my paycheque or income goes directly into my savings. I set up a monthly direct debit (that’s an automatic transfer to those non-Brits out there) – so I didn’t have to manually transfer part of my paycheque while trying to convince myself that it wouldn’t be better spent on building a new terrarium from scratch. Another bonus of opening a savings account? The interest means your bank will add a little to that balance over time.
The next thing I did was to download a money management app to my phone (I’m partial to Monefy, but apps such as Mint work well too). I’m the type of person who will spend a little here and there, won’t record it, and then a week later I’ll wonder where all my money went; after all, I only bought a couple of pairs of socks, my regular latte, a muffin, a new notebook for Uni. The little purchases really do add up. Money management apps allow you to input all your expenses, from household bills to travel expenses to meals out, so you can get a clear look at where your money is going each month. I learned to log everything I spent (no matter how small) on the app so I could keep track of those little expenses and ensure that I didn’t end up buying just one more book from my to-read list when I really couldn’t afford it.
Once I got a clear look at my spending habits, I decided to make a budget, allowing for my average monthly expenses such as grocery bills, rent and a certain allowance for extras. You don’t need to face the tedium of opening up an Excel file for this (a career in accounting would be a personal hell for me), as there are plenty of free online tools that are much more accessible. The idea isn’t to forgo treating yourself, but to prevent you from overspending or being tricked into all those little impulse-buys that can have a big impact on your bank balance. Having a pre-arranged spending limit has stopped me from stocking up on the mostly useless crap that many stores place temptingly at the cash register.
Lastly, as terrifying as it can be, don’t avoid your credit score! If you have outstanding loans (not counting student loans- phew!), your credit score will reflect this, and may one day stop you from taking out a new loan for Crazy Adult Stuff you want, like a new car or a house or a giant terrarium. Understanding your credit score and how to build up credit is often avoided because of the stigma attached to credit card spending and debt, but at some point having a credit card becomes vital so you can develop your credit score. As long as you’re cautious and prepared, you’ll be fine. After researching this, which I’ll admit is pretty boring but very important, I feel much more confident with taking the plunge and finding a credit card that suits me.
All of this can seem overwhelming to a 20-something who spends most of their time behind a laptop, bleary-eyed and caffeine-fuelled, in a last-ditch attempt to format a script on Microsoft Word, but ‘adulting’, while tough, is pretty necessary to me these days. At least, when I’m done budgeting I can kick back with some instant ramen…
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