Though it may not be on your timetable, your finances are as important as any class offered by your faculty. The only way you can earn top marks — or in this case, savings — is if you prepare for your finances like you would a final exam. Studying up on financial literacy is your key to juggling the financial side of your academic pursuits. Though it may not come naturally to you, it’s something you can learn, and you can improve your chances of staying on top of your finances with the help of a self-made budget.
Financial Literacy is an Important Facet of Your Education
Financial literacy is the foundation of healthy finances. It represents the basics of numeracy and common financial services, so individuals can make informed decisions about their money and the products they use.
Unfortunately, financial literacy is something the States struggle with. According to Standard and Poor’s Rating Services’ Financial Literacy Around the World survey, 43 percent of Americans are financially illiterate, and they fail to understand compound interest, risk diversification, and inflation. The U.S. Bank’s 2015 Students and Personal Finance Study suggests college students are no better, with 65 percent of respondents giving themselves a “C” or below in managing their money.
A Budget is Your First Step
A budget can help you develop your financial literacy as you work on tracking expenses and meeting financial goals. For most students, the goal is breaking even, but after you graduate you can use these skills to help you pay off student loans, live on your own, and create savings.
A budget helps by anticipating your upcoming expenses, so you’re never blindsided when they’re due. It’s only effective when listing accurate figures, so it’s important you forgo vague, estimated costs for the precise fee on receipts and other official documents.
Though it varies from university to university — and from degree to degree — the average student can expect to pay between $36,798 and $54,818 in tuition each year studying at Cornell. With this sized figure, tuition will represent your biggest expense, but it’s by far the only one you should include in your budget. A well-rounded budget should include the cost of living, dining, books, supplies, health-related expenses, and personal and/or miscellaneous purchases.
Study up on the Basics
Like any big assignment or final exam, a budget can be a daunting task. It’s especially difficult if this is the first time you’ve ever had to make one. Don’t worry if you aren’t sure where to start. There are online resources that walk you through each step of your budget to make sure you’re on the right track.
MoneyKey, for example have a financial information portal to help their borrowers bridge the financial literacy gap. There are also money management apps that move your budget off the page to your smartphone. These apps sync with your financial accounts to make our profile and use the information to organize personalized budgets. Though they don’t offer the same insights into budgeting as MoneyKey’s rules, these apps offer an easy and convenient way to track expenses.
List Costs as Accurately as Possible
Accounting for these purchases is no doubt tedious, and it will take both time and effort to list them accurately. Students can use estimated cost of attendance to help them work out the final cost of their academic school year. There are also other resources like Top University’s estimated cost list that can help you identify your yearly costs.
Exploit Savings in Variable Expenses
Some features of your budget will be invariable. Something like tuition can’t change, regardless of how much you wish it would. The variable parts of your budget can fluctuate depending on how you use them. Things like rent, books, and food can change when you make smart choices. You can lower your cost of:
- Rent by living at home or with roommates rather than on your own
- Books by sharing texts, by buying them second-hand, or by using free e-books
- Groceries by using cheap eats resources
- Miscellaneous purchases by using rebates and other shopping apps when you need household items, school supplies, or new clothes
Look for Income to Help Cover These Costs
The big question is how you’ll balance your budget. After listing expenses, the next step is listing streams of income, whether it’s financial help from parents, scholarships, savings, or a job.
Though higher learning can already feel like a full-time job, many students add a part-time job to help cover their cost of living. The latest survey by Citigroup and Seventeen magazine revealed 80 percent of students hold a part-time job, and they average 19 hours of work each week during the school year. Meanwhile, a growing number of students are now working full-time to pay for part-time studies.
Work is something you need to consider after you’ve tallied your expenses and the cost of your education. But like a budget, a job is only one step towards owning your financial literacy. True understanding of your personal finances takes life-long learning.
Just as you would hit the books to ace your test, you need to study your resources to balance your budget. You don’t have to worry about where your money is coming and going each month when you prepare for your finances, which means you can devote all your attention on your classes. Stay on top of your finances, and your grades will follow.
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