Managing finances when you are in college can go a long way in ensuring that you graduate with no debts. You can manage your college finances with relative ease if you are willing to spend money wisely and save money when you can. Here are a few tips that you can use for effective money management in college.
Create a Plan for Expenses
The first step to managing your finances is to create a plan for your expenses. By creating a plan, you will be able to stay within a range and not go over what you can afford to spend in a period of time. One of the main financial problems students face has to do with borrowing money to meet expenses that their funds can’t meet. By borrowing frequently from more than one lender, you can pile up a huge debt by the end of college.
Your expense plan will help you establish benchmarks for expenses. At the same time it will give you a sense of flexibility for spending, because with an expense range, you can spend more freely, without exceeding your limit. For instance, with a strict budget restricting you to spending $10 a day, you may feel uncomfortable when you have an urgent expense to meet. Instead, create a range of $70 to $90 a week and this way you can spend more on one day, and spend less on another, giving you the freedom to decide how to spend money.
Start a Contingency Fund
A contingency fund is important for students because it can serve as a back up fund when something goes wrong. While borrowing money in a crisis from friends and family may be an option when you have the time to ask for and receive the money, it may not be possible when you are in immediate need of money. With a contingency fund, you can access money for your immediate needs without having to worry about who to borrow it from.
Avoid Using Credit Cards
Careless use of credit cards is another reason why students accrue debts. As money loaned on credit cards has a high interest rate, paying it off on a student budget can become difficult. If payments are not made on time, your credit card debt will keep accruing. So always avoid using credit cards; instead, use cash from your student fund.