“Don't be afraid to fail. Don't waste energy trying to cover up failure. Learn from your failures and go on to the next challenge. It's OK to fail. If you're not failing, you're not growing” – H. Stanley Judd
For many students, university and college is an opportunity to learn about much more than just the subjects that they are studying. So much of the University/College experience seems to revolve around figuring out the best (and worst) ways to do things, testing limits, falling down and getting back up again. Lessons about life, love and friendship are as much a part of the student experience as the academics; some of those lessons are easier to absorb than others but it seems that the hardest lessons are often the most powerful. For students living away from home for the first time, managing their time and their finances effectively can be two of the most challenging aspects of student life to master. However, any student who can get them under control can be sure that they’re creating a solid foundation for their future success. When it comes to managing student finances, the principles are very simple:
Understand Your Cashflow
Student finances can be tricky to manage because often students will receive large sums of money from student loans and bursaries that need to last for several months. Human nature and a person's money psychology make it very tempting to spend more than necessary at the beginning of the semester when the bank account looks healthy which can make things challenging later on. Figuring out how much money a student needs for tuition, books, food, accommodation, transportation and other necessities and putting it straight into a separate account (preferably not one linked to their debit card!) can help them determine more clearly exactly how much they have for extras and reduce the risk that they’ll overspend without realizing.
Keep Track of Your Spending
Keeping track of your spending is the easiest way to keep it under control. Figuring out a reasonable budget or money management system and then keeping track of spending is a great way for students to avoid going into debt. It’s also really good practice in developing good spending habits and effective money management skills that will help them a great deal once they graduate. It's not always easy at first but if students can make tracking their money a habit it will go a long way to keeping them out of debt.
Related article: Know Your Spending
Minimize Your Expense
This may sound logical but for many students it doesn’t come naturally and a big part of that is because they expect their lifestyle as a student to be exactly what they’ve been used to at home. Often, that means eating out regularly, lots of trips to the mall and those “must haves” such as VIP cable and super-fast internet. All the little luxuries that can make living on a student budget seriously challenging and taking on more debt seriously tempting. Human beings are hard-wired for pleasure so it can be hard for students to cut back on the things they’ve come to take for granted, especially when so many other students have them. However, the fact is that the less debt graduates have when they start working the better off they are in the long run. Trying to shift their perspective to see reducing expenses as empowering rather than restrictive can go a long way towards helping students to keep their spending in check.
Related article: Watch Your Spending Habits
Contribute as Much as You Can
Part-time work while in school and full-time work when not in school can go a long way to helping students stay out of debt and can also help them value their education more. We can’t help but attach a value to something that we’ve had to work for and working in order to help pay for education is no different than working and saving hard for a new computer or something else that we really want. There are also lots of bursaries and other grants available to students with good grades or who meet certain criteria and students who are willing to take the time to research and write application letters or fill out application forms can often get a great financial return on that time investment. I know of one student who funded her entire degree through bursaries and part-time work and she found herself miles ahead of her classmates financially within a short period of time after graduation. Education can be expensive but the more students can do to help cover the costs of being in school, the better off they’ll be after graduation.
Related article: Ways to increase your income
At the end of the day, university (or college) is a training ground for life, not simply for a chosen career path. The whole experience is a unique opportunity for students to develop the money management skills necessary to succeed in the “real world” and to build a solid foundation for their future financial success. It's also an environment riddled with opportunities to get into debt; an environment rich with offers of student loans, credit cards and credit lines that are likely to be approved based on a student's expected income upon graduation rather than their current situation. Being approved for credit is not an indicator of a person's ability to manage it or pay it off. The more we can do to help our young people avoid falling into the debt trap during their student years so that they can graduate with as little debt as possible the better off they will be in the long term and this is a topic I'm planning to explore further in next week's post.
As always, if you have stories and strategies to share on the subject, I'd love to hear them!