STUDENT FINANCES

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You have to agree with me that as a student, you have the opportunity to receive free money no matter how small and your responsibilities are naturally few; It is a right and a privilege which many do not treat as such. I use the word free because you do not work for it in the actual sense of the word. Financial stability is not the characteristic of a student from a wealthy or average family, it is a characteristic of a student who knows what management entails. A student who is responsible and future-minded. I tell myself every time that in the future I should be able to buy what is needed without looking at the price tag; I do not want to compromise on quality when it comes to my family, friends and I but I do not know about you.

It is never too early or you are never too young to think of your future as an independent individual. Every person desires the ability to fend for him or herself. The future is capricious, so assuming you will be rich/poor in the future just because your parents (family) are such in the present is a delusion. Now, when you think about it, success is all about management. You have to control your feelings, finances, desires, thoughts and even the people around you so as not to make a rush decision or deadly mistake.

In the instances of financial administration, there are some key aspects of it. They fall under two broad issues – strategizing and budgeting. These are the tips and tricks I use and they are very helpful.

First and foremost, you have to strategize. It involves planning your actions to certify accomplishment of goals which in this case is financial freedom and comfort.  Before you start strategizing you have to ask yourself a few questions; why do I need the money? when/how soon do I need the money? How much do I need? With these questions answered you can easily and quickly work on the next stage which is drawing a budget. 

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A budget is simply a brief description of anticipated expenditure and assured revenue – what you have and what you need, not what you might get and what you might want. With this, two things are fundamental – saving before you spend and prioritizing your expenditure. To know how much to set aside as savings you have to know what you are saving towards which has to do with the strategy you deduced. I normally advice either 1/3 or ½ and you will know why. This 1/3 or ½ is what I call the investment cut. The investment cut is solely and I repeat solely for investment because in this era investment = financial liberty. You want to have something stashed away for life, a final alternative of some sorts. You are appreciating and preserving your capital as well as giving yourself a chance to receive income without working for it. 

So finally when you are drawing your budget, you do so on the 2/3 or other ½ and this is the only way it is going to work since you are ‘forgetting’ that 1/3 or first ½. The 2/3 or ½ is not spent indiscriminately or fully exhausted. I know a lot of you are probably agitated and think that you have saved so now you must freely spend but no that is not the case. You have to make sure that at least 1/3 or ½ of the 2/3 or ½ is not spent and therefore saved for emergencies or unforeseen circumstances or to even occasionally spend on wants, something you can call petty cash.

You are doing this so that impulse buying is not encouraged and the investment cut is not touched. You can achieve this by prioritizing your needs and wants - what you need most and soonest before what you need least and later. After which you can add a want here or there as long as it is within the monetary constraint you are drawing your budget within. Saving the extra from the 2/3 or ½ in a bank account is ideal when it piles up so you can easily access it when it is necessary and at the same time gain some little interest. It is a win - win situation. Sometimes I lend the petty cash to RELIABLE people, that way you are helping your friends and indirectly saving but do not lend all else you will become handicapped and forced to fall on the investment cut which is a no- no. 

With the issue of unexpected revenue such as gifts, interest and bonuses, a lot of people see that as a prospect to spend beyond the normal but it should be a chance to save better and attain monetary independence more rapidly. Visualize this, compare a situation where interest is left to appreciate in addition to capital with a situation where the interest is always withdrawn and spent or a situation where you always spend your bonus and a situation where you add your bonus to your capital which you have invested. Which one is better in the long-run? 

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Future-mindedness or future orientation is the key to financial liberty because if you think of the now, you will only desire the fulfilment that comes with attaining an immediate want – the latest smartphone or car, fast food, hair/weave, clothes, jewellery, bags, shoes, event ticket or even showering your significant other with gifts. None of these things are bad to do or have but you have to realise that you cannot afford it now without forgoing something significant in the future. 

Discipline is also extremely important in the attainment of financial liberty. You are in control of the money so you have to be disciplined to be able to go by what you have decided. Even with the investment cut, it will not always be locked or inaccessible. There is always a time frame so when that time is up you have to be meticulous enough to re-invest and not withdraw the money and spend.

Let us momentarily have a discussion on investment. We all know what it is, there are investment companies and even banks where you can buy an investment package or you can invest in a company or invest in a commodity (e.g. gold) but the right decision is dependent on your strategy or plans and if you are risk adverse, risk neutral or a risk lover. You have to also decide if you want to be an active or passive investor. Either you frequently engage in other investments or/and re-investing (e.g. investing the interest of investments in other investments) or you just have one or two investments that you allow to continuously roll-over. 

These tips and tricks are not only beneficial to a student but any individual who aspires for financial liberation. This must also be a way of life; it must be automatic not something you continuously think or worry about as you do it. When you allocate your revenue according to the investment cut, petty cash and expenses you will be able to invest, save, meet your needs and acquire your wants; financial stability it is.

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Thank You for Reading and Welcome to the Billionaires Club!