When you study abroad, financial responsibility is an important life skill to learn. The first step to becoming a responsible adult is learning how to manage your finances. If you have read our guide to budgeting, you probably have an understanding of the basics of financial planning and budget making.
However, unless you learn how to manage your spending habits, you may find your financial planning and budgeting to be futile. Learning how to spend wisely enables you to remain true to your budget and helps you develop financial responsibility.
Here is our guide to spending wisely so that your finances can back up your education plans and dreams.
1. Recognise & Cut Unnecessary Expenses
It is common for young college students to simply not be aware of where their money is going. This is not something to be embarrassed by, you are still young and inexperienced, but it is definitely something to take notice of and correct. You should know what you are spending your money on and if those expenses are justified. A financial plan and personal balance sheet may be a very helpful resource in tracking these expenses.
Once you do have a list of your expenses, pick out the ones that you know are unjustified. Be firm and disciplined in this, do not cut yourself any slack. If required, you can ask a parent, a trusted relative or older sibling to help you pick out your unnecessary expenses. Once these expenses have been sorted out, it is your responsibility to cut down on them.
Unnecessary expenses commonly include things like eating out at restaurants too frequently, too many subscriptions to streaming services and unnecessary shopping and gaming. This is not to say that you should not spend on these things at all. You should certainly indulge in some discretionary spending, but it is important to be able to keep it as minimal as possible.
2. Make Shopping Lists
Planning your purchases in advance is a great way of managing your discretionary spending and avoiding impulsive purchases. You should certainly plan all big purchases, like electronic devices for vehicles, but even for relatively small purchases, it helps to have a shopping list.
Make shopping lists when you go to buy groceries or when you go to the mall for clothes shopping. Stores are often constructed in a way that they captivate customers and entice them into making impulse purchases. By having a shopping list or at the very least a shopping budget or allowance, you force yourself to stay focused and consider your items thoroughly before you purchase them. Shopping lists also help you pick exactly what you need and leave the store quickly. This reduces the chances of making an impulse buy.
3. Use Student Discounts & Campus Facilities
Going to study abroad has benefits, amazing campus infrastructure and amenities are just one of them. Foreign universities have sprawling campuses with facilities like recreational centres, gyms, swimming facilities, game centres, etc. As a student there, especially if you live in the dorms, you will have full access to these facilities. It is a good idea to make full use of these. You are already paying tuition and other fees to attend the college, it only makes sense to get your money’s worth.
In addition to using these campus facilities, you should also make use of student discounts wherever you can. A lot of restaurants and cafes around college campuses offer student discounts as do places like hair salons and beauty parlors.
You can access public transport for free or at a much more discounted rate if you get a student pass. Similarly, many airlines offer student discounts for college students travelling to see their families. This can be of special help for you when you study abroad.
4. Pay Your Bills On Time
You may be forgiven for not knowing this as a young adult, but every time you don’t pay a bill on time, it accrues late fees. Not paying your rent, utility bills or library dues on time can cause you to accumulate late fees and surcharges that can easily overturn your entire budget.
It is important to avoid these late fees at all costs. Set reminders for yourself for all upcoming billing dates and pay your bills before that date. Most bills are due by the first week of any given month. On the last week of each month, make a list of all your bills and set aside money for them even before you have received any. As soon as you receive your allowance from your parents or scholarship, or as soon as you get paid from your part-time job, pay your bills.
Late fees are not only a needless financial drain, they can also seriously affect your credit scores and make it difficult for you to rent a house or get any credit or education loans in the future. Paying your bills on time is not only important to stay out of debt, it is also a good monetary habit crucial for any adult.
5. Avoid Retail Therapy
Retail therapy is probably the easiest way of picking up your spirits when you are down. It is also one of the easiest ways to develop a shopping addiction and fall into debt. This is especially true if you use credit for shopping online or in stores.
Shopping when you are in a bad mood is a bad idea. Buying new things gives us a short rush of endorphins. This means you are more likely to make impulse purchases or buy things you don’t need.
Shopping when you are intoxicated or late at night when you are sleep deprived or stressed is an equally bad idea because your judgement will most likely be impaired. This encourages you to make bad purchase decisions that can overstretch your budget and cause big regrets down the line.
A much better way to deal with your emotions when you are feeling low is to go for counselling. Your college probably already has facilities for counselling of students and you should make good use of those facilities. When you study abroad, away from your parents, families and support systems, it is easy to fall into despair or depression. Appropriate counselling and guidance can help you deal with those feelings in a healthy way.
Learning how to spend wisely and inculcating good monetary habits are crucial life skills for any young adult. Not all lessons you learn in college will be learnt inside a classroom. Some lessons you will have to teach yourself through self-experience. Financial accountability and responsible spending habits are one such lesson. While it may all seem too complicated and too much right now, it is all part of growing up and becoming a sensible and responsible adult!