One of the most common questions that students and parents often struggle with is ‘when does a college student become financially independent’. As you turn 18, this question becomes a concern and intensifies over time.
However, being financially independent doesn’t mean that you need to get on your financial peaks in your sophomore. Also, don’t go into droopiness as you see your student loan debt growing. For all students, the age range of 18 to 21 years is when you’re likely to practice your independent role.
For college students, budgeting and managing expenses can be daunting, especially at the times when you just enter college life. It’s not only about college expenses. Most young kids or teenagers don’t realize the high costs of their everyday essentials. Therefore, when you reach that independence, it becomes difficult for you to manage your spending efficiently.
Making payments towards student loans, paying sorority fees, and a portion of phone bill out of your pocket might sound like you have become an independent adult. Yet, sometimes it’s hard to take on so much financial responsibility and handle your expenses without any bother.
When it comes to saving and budgeting, most of you would find it challenging to manage. Of course, in your teenage years, you’re on the verge of spending money to satiate your temptations. No matter where you go, there’s always something enticing to your eye and you’re likely to spend money, even when it’s not what you ‘need’ but just what you ‘want.’
Put simply, while going financially independent doesn’t seem an easy thing, WritingCheap is sharing some practices to help you handle your finances efficiently.
How to Become a Financially Independent Student
There is no doubt that developing effective money management skills early will help you prepare for some important life events. These may include purchasing a house, buying a car, or saving for a dream vacation.
Not to mention, managing your finances poorly can adversely affect your credit score and result in financial instability. Hence, it’s better to learn and begin practicing strategic financial management skills as soon as you can.
1. Create a Monthly Budget
While in college, start tracking your monthly spending. Well, this is the first important thing you need to do. Setting a budget will give you a clear picture of where your money is going. Eventually, you will be able to evaluate your spending and succeed in altering your spending pattern.
When you get an idea of how much amount on average you spend each month, make your budget that entails a specific amount of money to save every month. If you don’t like doing the paperwork for this, you may create a budget on an app.
Not to forget, most of the budgeting is about making choices and prioritizing. Make sure to differentiate between your needs and wants. Before making payments for everything, first, ask yourself if it’s worth buying. Is it worth buying a coffee every day or you can brew at home to save money? What would be cheaper: to use services to get an essay done or write it yourself using free tools?
By changing your spending habits, you will be able to save some money, which can add up to more meaningful and larger purchases, like buying a car. In simple words, it will be easier to stick to a specific budget when you are on your own and have to pay for additional expenses, such as student loans, insurance, rent, and utilities.
2. Use Credit Cards Wisely
Since a credit card is great for your convenience. It may seem easier to use a credit card to make a purchase and pay later. Nevertheless, you’re likely to end up paying a lump sum later on.
Keep in mind that a credit card doesn’t equal free money, which means that when you use a credit card, you’re borrowing an amount you will need to pay back. One of the pitfalls of using credit cards is that you will have to pay interest on the amount you spend.
For late payments, you will be paying a surcharge amount. However, if you can use your credit cards responsibly, it’s better to use a card than cash at times. While not all credit cards are equal, make sure to check out for annual fees, interest charges, and other details, prior to choosing.
3. Pay Off Your Student Loan
When you start earning, you may want to put off your student loan debts at the end of the list of payments. However, this can be a big mistake and make you fall in an inevitable financial pitfall. The longer you wait to repay your loans, the higher the interest you will need to pay. Put simply, not paying your student debts or paying them too late can adversely affect your credit rating and have a significant financial impact on your future. As a result, you may end up being unable to secure a home loan.
4. Saving for the Future
The old saying about ‘saving for a rainy day’ is great advice. You never know when a drastic financial change may come into your life. From increased rent to losing a job, any unexpected situation can hurt your bank account. However, savings for emergencies can help you deal with the problem without any hassle. Try to build up your funds to cover at least 3 months of spending. For some people, saving is nearly impossible with their starting salary, which probably goes into all essential expenses.
However, keep in mind that as you advance in life, you’ll be able to save more. Smart financial decisions as a college-going person will allow you to have more of the things you want in the future.
The Main Takeaway
Being a finically independent college student is a great thing. In fact, you’re likely to feel grateful that your parents are not paying for your college. You will feel more prepared to become a completely independent person by handling countless other expenses.
In a nutshell, following the aforementioned practices will help you adopt smart financial strategies, ensuring your success in the future refurbished iPhone.