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Do you live off of ramen noodles, cup a soup and black coffee? Such is the life of a university student! Being a university student is one of the best experiences you can have. However as prices rise every year for common goods, you need to find clever and strategic ways to make sure your hard-earned dollar goes far.
The way we are wired causes us to always want more than we need and as society and materialism progress, we are constantly bombarded with clever corporate marketing through ads on our phones, television or celebrity endorsements. That’s why we are always upgrading to the latest phones, even though our current model has more than a 2 year life span!
There are many articles out there on how to structure your student budget such as saving money by eating out less. However the hardest part is understanding why we need a budget. Once we understand why we need a budget, we can set targets and goals to make small but significant changes to reach them.
Laying the groundwork for smart budgeting and spending habits now, will help you to handle responsibility and learn the value of accountability. Accountability is key to budgeting! The following tips will help you set up a student budget, while also keeping yourself accountable to them.
Tip 1: Why Budget?
First, figure out why you need to set a budget. Asking yourself this will give your budget purpose. The typical response would be to save money for a larger purchase later on such as your dream car or holiday. But we need to consider how this budget will impact our lives. For example, maybe you need $10,000 to buy a car but what are the long-term prospects and what is our timeline. Is the purchase urgent? We need to figure out if it would be better to invest the $10,000 or use it now. If we take the pathway of investing the $10,000 and turning out $12,000 within one year, we go back to question if we really needed that car. This will underpin our original decision of buying that car one year ago, since we have sacrificed the purchase of the car and invested it to grow.
Tip 2: What makes the cut?
It all starts with a chain of prioritizing our needs. We all need food, water and shelter – so put that at the top of your list. This is where most problems occur with budgeting. People tend to think short-term and focus on obtaining what we desire for example new $200 high-tech headphones. As a result of desiring these headphones, we cut $50 from our food budget and save by buying cheaper lower quality food. Although acquiring those brand new headphones is satisfying now, eating those $2 noodles and sleeping on friends’ couches will end up costing you in the long run. As a result of a diet of cheaper lower quality food, we may end up spending on some major health cost, medication, vitamins and medical bills in the future. Take care of yourself and the rest will be easy.
Tip 3: Stick to it!
The main way we find motivation to stick to a budget and ensure our goals are reached is to make sure if we need that good or service later on. As humans we tend to try to satisfy the here and now. Afraid that we will miss out if we don’t get it and therefore we end up neglecting our future cost. The more we need those quick fix $200 headphones, the faster you will save up to attain it because you have that motivation. But we tend to neglect saving up for goods that need a longer term savings ability, such as university fees. If we reverse engineer this concept and set our goals of saving up for university fees for the next five years instead of ten years (even though our tuition will be paid in ten years time. This will allow us to be twice as productive while sticking to our goals and reaching targets. If we are after short-term gains, they why don’t we convert our long-term goals into short-term goals, so that we can reach them as fast as possible, while also improving our chances of being accountable to the goals? This concept will require a lot of immediate sacrifices but as we start hitting our financial targets, we tend to set more goals and acquire more goods that we need, while also maximizing our potential.
Overall you need to figure out what you want from life, set goals for yourself, set a structure, be realistic and stick to it! Sometimes it’s better to bear the pain and get the important things done first. Eventually when your long-term goals are achieved, you will pat yourself on the back and buy a round of drinks for the boys!
Create good habits while you are young, the best feeling we can have is reaching our targets and once we reach them, we are motivated to set up and reach our next target. Once you get really into it, you are always looking forward to getting to the next level!