Here are 8 Financial Tips for Students

With proper financial education, students can build a foundation for a successful financial life. There are numerous aspects that students need to master to become financially independent.

Are you a student looking to gain financial freedom? If so, here is what you should do.

Set Your Financial Goals

It is important to have a clear understanding of what you want to achieve financially in the short or long term. This allows you to embrace habits that can help you attain your financial goals. Some of the short-term goals you can set include moving to a new, bigger apartment, making massive purchases like home appliances, or going on a small vacation. The long-term goals, which usually take over five years to achieve, include saving for a down payment on your dream house.

Create a Budget

A budget helps you plan how to spend your monthly income properly. Popular Financial Education Instructor at The Money Plug, Markia Brown, says that the first critical step to achieving financial stability is creating a budget. She adds that a budget allows students to eliminate unnecessary expenses while helping them figure out the amount of money to channel toward important goals like paying off debts.

Open a Savings Account

Every student needs to adopt the habit of saving as early as possible. While saving can be challenging at the beginning, you are likely to become comfortable with it as time goes by. Brown recommends that students should save at least 20% of their monthly income. However, those who are unable to save that percentage can find financial institutions that allow customers to start saving from as low as $5 per week.

While selecting a bank to register a savings account with, it is advisable to factor in the interest rate charged. Choose a reliable bank that imposes high rates to gain more on your savings account’s balance.

Invest for Retirement

Chartered Financial Analyst Jeff DeMaso says students should prioritize investing for retirement. He argues that while the results of compounding take time to show, they can be massive for students who begin to invest for retirement early. DeMaso advises students to look for index funds with low costs and automate their monthly contributions to such investments.

Establish Emergency Fund

If you want to live independently after finishing school, then setting up an emergency fund is key. Like savings accounts, emergency funds do not require students to spare a lot of money to get started. You can begin depositing as little as $5 per week to your emergency fund and increase the amount as your monthly income grows.

Seek Financial Aid to Help You Reduce Your Student Loan

Amplify My Wealth founder Alissa Maizes advises students to apply for grants, which help them reduce the student loan burden. You can visit the academic department of your school to find out about any available financial aid programs. You can also apply for Federal Student Aid once a year.

Begin Building Credit

It is crucial to start building credit as early as possible. That’s because you might soon need a house or a new car. And to get loans with favourable interest rates, your credit score needs to be good. So, you should begin building your credit now.

But what are some of the recommended ways of building credit? One is to obtain a credit card. After that, pick a few things that you can pay for with the card, and then ensure you make monthly repayments on time.

Minimize Debt

While it is likely that you will require debt to pursue your educational ambitions, try to minimize it. You can look for other ways to earn money to cater to some of your expenses. For instance, you can work part-time at a retail shop or run a babysitting side hustle.

After completing your studies, establish a repayment plan and work towards clearing debts with high interest rates as soon as possible.