You’ve done it. Graduated. Now you’re headed into the great unknown to follow all your college dreams. Yet with this freedom comes great responsibility, right? Right!
Part of being an adult is managing your coins (not those digital ones in your WeChat wallet, but the real, grown-up ones) as adults do. College is the best time to develop healthy financial habits and start building wealth, even if you don’t have a lot of money coming in. And the good news is you don’t have to wait until you leave for college to begin. Saving for tomorrow actually started yesterday, so let’s get going!
Know Your Current Money Moves
Start tracking your money habits now so you are aware of your money moves. Begin by taking a look at how you are currently spending your WeChat dollars. Not so sure? Pull up your WeChat wallet and go to Transactions. Take out a pen and paper and record your purchases for the last 30 days. Where did most of your money go? Food? Entertainment? Shopping? Make a list of the total amount for each area and ask yourself: What did I discover about my money habits? Am I more of an eater outer, or am I the next master chef? Am I a person who likes to hang out with my friends? Or am I a shopper? Knowing yourself and how you spend your money is the first step in creating a budget that works for you.
Here’s a challenge for you. Until you leave for college, give up one of your most purchased small items and save the money you would have spent. You’ll be surprised to see not only how often you purchase that item, but how much you are saving instead.
Budget: Not a Bad Word
Budget. Most people dread this word because it sounds super restrictive. However, I challenge you to think of your budget as your “say yes” buddy. Do you want a dream vacation for spring break? Yes! Then you need a budget. That new pair of Jordans? Yes! Then you need a budget. Your budget becomes your best friend when you think of it as a means to have what you want! So, how do you create one of these budget besties?
First, write down all of your expenses. These include your fixed expenses – those expenses you must pay each month. Hello tuition, rent, and transportation costs. These may even include subscription services like Netflix or Spotify, or even your phone bill. Typically, these expenses are the same amount monthly.
Next are your variable expenses. These vary from month to month and include things like groceries, eating out, shopping, or entertainment. Typically, you do not spend the same amount every month in these categories.
Looking at your two lists, circle those items that you consider Have Tos – typically your fixed expenses. Then, draw a box around those that you consider Want Tos – typically your variable expenses.
Once you’ve determined all of your expenses and added them up, now comes the hard part: subtracting them from your monthly income. Your monthly income is the total amount of money you have coming in. Think of this in terms of money from your parents, your part-time job, side hustle, internships, scholarships, or financial aid.
If you have money left over, hooray! You’ve budgeted correctly. If not, that’s OK – you may need to make some adjustments to your Want To list. Remember, your goal is not to be in the negative. This is where the 50/30/20 rule comes in.
Ugh, I dislike rules as much as the next person, but this one sets you on the path towards financial success. The 50/30/20 rule states that you reserve 50% of your monthly income for your Have Tos, 30% for your Want Tos, and 20% for savings. Here’s how you do it. Let’s say you receive RMB 10,000 a month as your income. Remember those things called needs – those expenses you need to pay, like rent, phone bills, etc. After you get your income for the month, 50% of your total income goes towards those needs, which in this example would be RMB 5,000.
The 30% of your income is for your wants – hello matcha latte on the daily! Be careful here, because in our example only RMB 3,000 goes towards spending on these wants. Here’s where you really have to get real. How much do you really want your want? If it’s really, really, then that’s ok. This just means you may need to give up something else you only kind of want. It’s all about give and save.
The 20% goes directly to savings, so deposit that remaining 20%, which in our example is RMB 2,000, and forget about it. Here’s the thing about saving: Saving now means living comfortably later. Placing 20% of your income into an interest-bearing savings account, or investment account will grow your money even faster. Even better if you set up an automatic withdrawal to your savings each month. You won’t even see it!
Get Techy With It
There’s an app for that! When you are first setting out on this budget journey, it helps to have help … and apps are the way to go. Here are a few you can try:
· Mint – Easy to use and stick to, Mint securely links to your bank accounts and automatically inputs every transaction, making it easy to see where your money is going. Plus, they give you reminders to help you with overspending and have stellar tips on creating a budget. Win, win.
· YNAB (You Need a Budget) – This is a super helpful app that assists you in tracking every dollar you spend. Talk about knowing where your money is going. YNAB helps you become intentional with how you spend your money.
Discounts, Baby…
Here’s the lovely thing about being a college student. There is literally a student discount for EVERYTHING. Netflix, Spotify, virtually every streaming service, restaurants, clothing stores, computers, cell phones – you name it and pretty much almost every business around you has a student discount that you basically only need your college ID to access. If you’re not sure, ask. Make sure you are getting in on all the deals. Check out apps like UNiDAYS and Honey for more deals.
Use your campus fees. So, for college students, there’s a little fee called a student usage fee. Basically, it’s what your college or university charges you to be a student there. You get charged this fee whether you take advantage of it or not … so use it or lose it. If you need to print anything, print on campus instead of using your precious ink. Use your campus gym to get your sweat on. And take as much advantage of your campus meal plan as you can. That’s right, most colleges and universities offer a meal plan, which basically means … you eat. For free. On campus. And at most times, whenever you want. Super easy way to cut down on your food budget.
Insta Inspiration
Sure, we follow influencers for entertainment, style, and fashion, but what about money? The new trend in influencers includes finfluencers, who are all about financial literacy. Add these to your feed for a healthy dose of money management info:
Sara Finance @sarafinance – Interested in starting your own business? Sara is definitely your go-to. Also make sure to check out her YouTube channel: Sara Finance
@napkinfinance – Everything you’ve always wanted to know about money, drawn on a napkin. Check out their feed of fun and quick money advice.
@TheFrugalGene – Meet Lily, your go-to for tips on how to save money.
@calltoleap – Meet Steve Chen, a former math teacher who helps beginners learn about investing and the stock market.
Dream Big … Then Add Tax
Here’s the thing: You have an amazing future out there, and it’s never too early to start visualizing what that future entails. Create a visual financial future vision board. Find images and words that represent the future financially savvy you. Place them on a poster, or make a nifty Canva screensaver and look at it daily. Visualization helps you practice success, training your mind to see your dreams in real-time.
Images: Pexels
