Long-term financial strategy for college students
- Yeiz The
- Aug 1, 2021
- 4 min read
College is an exciting and challenging venture for most students. Living on your own, making decisions for yourself, and having to manage your finances are just a few of the obstacles you will be facing. For these reasons, having a financial plan in place beforehand and sticking to that plan as closely as possible will help you survive college life. Moreover, financial management is a skill that will accompany you throughout your life, and developing good financial management habits early will set you up for the stress-free financial future you deserve. Here's how to build a strong financial long-term strategy during your college years.
Create a budget
Learning how to budget is extremely important for college students and it is something that you should start doing right away. A budget is a plan of how you will spend your money each month. When you create a budget and track your habits, you will have insights into where your monthly income is going and where you need to cut back.
Let’s begin by going to this Budget Planner tool from the Government of Canada to make a budget. The first step is to list all your monthly income, savings, and expenses. Please review the data that you enter with the data from your bank account to make sure you didn’t forget anything. When you enter all your data, the next step is to review your results. The results section will be shown in graphics, which will give you a clear vision of how to monitor your money effectively. The result shows you how your budget compares to those of other Canadians in similar situations. Finally, the tool will give you some personalized suggestions. These suggestions are made by comparing your financial habits with people of the same age, income, …, thus, please spend some time to reflect them as they will help you determine where you should focus your attention on and how to reduce costs.
Track your expenses
Creating a budget is one thing, but sticking to it can be a different story. Taking a look at what you have been spending your money on regularly will help you stay on track with the budget you have come up with. For example, if you have budgeted $200 CAD for your monthly food budget but use it up in two weeks, you know for sure that you will need to make some adjustments to your habits.
The easiest way to track your expenses is through an expense tracking app on your phone and there are a variety of expense tracking apps available to help you. If you are not sure what expense tracking app works best for you, please check out our previous blog post to decide.
Open a savings account
Not only college students but many adults are also struggling with opening a savings account and saving money. It is tempting to spend your money first and then save whatever is leftover. However, if you do that, you will end up spending all money you have and there will be no money left to put into the savings account. Instead, pay all your bills and expenses first, then put some of your money into your savings, and finally the rest on yourself. Having a savings account for the future or for emergency situations is an essential part of long-term financial health. How much you save each month is up to you and your financial situation and the key here is to make sure you save something each month — no matter how small the amount may seem. Remember that saving a small amount of money each month can add up a huge fortune in the long term!
Learn/start investing now
The sooner you start investing, the more time your money has to grow. Therefore, it is critical that you should learn how to invest and how to make money work for you. Many students often assume that investing is too complicated and difficult, but this is a misconception. Nowadays, with the development of the internet, it is easy for students to start learning about investing because almost all students have smartphones and computers. There are a variety of free online investing courses on Udemy, Coursera, and LinkedIn Learning platforms that teach you in-depth about investing. You are taught by many stock investors with years of experience, and because these are online courses, you can learn at any time from anywhere. After finishing the courses, you can create a virtual portfolio and immediately start practicing skills that you have learned. There are lots of websites that enable you to set up a virtual portfolio for free such as Investopedia, Yahoo, and Marketwatch. If you are already busy with assignments and exams at school and you don’t want to have more pressure with extra courses, don’t worry because you can still improve your financial knowledge and be entertained at the same time through books and movies. Please check out our previous blog post about the best financial books and movies for college students.
In conclusion, learning how to save up and manage your money, in the long run, is a skill that takes time and practice to get just right. If you find yourself making mistakes, don't worry. You can always make adjustments to get back on track. Just keep focusing on building healthy financial habits that will serve you for many years to come.
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