Heading to college can mean that you’re still home with the folks for a few more years, or that you’ve finally made the break, and are out on your own, at last!
Either way, managing money is going to be a part of the rest of your life and setting yourself up with some good financial literacy skills is vital.
If you know someone who seems to have it together financially, ask them how they do it. And I don’t mean your mate with the latest toys, cars and gadgets who is drowning in debt.
Quite often our parents don’t teach us a lot about money and it’s most likely, because they weren’t taught themselves.
Where Do I Start?
Check out the ASIC MoneySmart website budgeting tool. A lot of people tell me that they can’t budget because they never know what’s coming in regularly. And that’s often true for college students. You may have casual or part-time work and never know from week to week what you’ll be earning. You may have a side hustle in the gig economy that just hasn’t quite taken off yet and it’s hard to know what you’ll get, and when.
For now, don’t worry about the income side, just work out what it will cost you to live. How much is rent or board, food, utility bill contributions and the basics? Do you have gym memberships, streaming subscriptions or gaming services? Make sure they’re all included. This is called ‘knowing your numbers.’
For larger more intermittent debts like car registration and insurances, see if you can get them broken down into more regular payments. It’s much easier to find $25 per week than $1,200 in one go!
If you then work out that it costs you $467.95 per week to live, or $1,300, you know what you need to make ends meet. Then, when you do get paid you’ll know whether you have enough to cover the basics with some left over, or need to adjust your spend. Maybe you can’t go out this Friday night after all.
Stay in Control
Being in control and understanding where you’re at at any given moment is quite freeing. And don’t get complacent, it will change all the time. Insurances, petrol and food costs may increase, taking on a partner or flat mate may decrease other expenses.
But, if you always ‘know your numbers’ you’ll know whether you’re getting ahead, or getting left behind.
If you’re fortunate enough to have left over funds each week, don’t spend them all on entertainment. Being smart early can pay massive dividends over time.
Start a small investment portfolio, learn how to invest in shares, top up your superannuation savings or concentrate on reducing debt. The sooner you start, the longer you’ll have the magnificence of compound interest working for you rather than against you.
There’s lots of blogs, podcasts and free information available now. Do your homework, find someone who talks your language and make sure you learn all that you can as early as possible.
This will truly have you set up for life financially.
Tips from Amanda Cassar – Adviser & Director at Wealth Planning Partners