Maybe you were brought up encouraged by family members to “never talk about money”, but when you’re a young adult, money, budgeting and personal finance is something we don’t talk about enough. Let’s get comfortable talking about money and budgeting.
Here are some helpful tips for anyone, young or old, to start on their financial journey (though it’s especially useful for someone who is just about to leave home for the first time). It’s good to engage with your finances now and understand how much money you have available to get through and enjoy college life.
Understand your total costs and how these will be paid for. Your monthly or weekly expenses will likely include accommodation, food, travel and other discretionary spends.
Do you have an income? This could include an income from a part-time job, a grant stipend or weekly input from your parents. How often is money coming into your bank account?
Next, gain an understanding on whether you have a surplus or a deficit. Are you making more money each week than you spend, or are you spending more than you make? If you have a deficit, how can deficit be bridged? Can you work more hours or can your parents or guardians support you with a cash injection or loan?
If you’re lucky enough to have a surplus, make a plan for it. Making a habit of saving when you can allows you to bridge the lean weeks and months – but also allows you to plan for other financial goals (think travel, purchasing clothes or technology, or going to a festival – remember those?)
Ultimately, seek to live within your means and start planning ahead. Be prepared to reign it in, at times, to enable you to meet commitments or goals at a later date.
Make a habit of tracking your spending. Examine your bank statements. Some banks break your spending down online, which is really handy. Keep receipts and go through them on a weekly basis. We are so used to not getting receipts now, it’s easy to lose track of small spending, which adds up. A daily take-away coffee adds up over the course of a month and a year. Tracking your spending allows you to understand where your money is going, and to cut back where necessary.
Look for ways to maximise your income without overly impacting on college work. Look for a part-time job that brings in some additional income. It’s also really good for your CV, to show employers you have experience working in a business. It shows you can work within a team environment and have strong commitment – and it’s good life experience too!
Shop around and avail of any student discounts. If there is no obvious advertised student discount, ask. You might be surprised! Cut expenses where you can. Walk or cycle instead of taking public transport. Bring your own coffee or water to class. Cook as much as you can instead of eating out.
When purchasing online, try to use a credit card or a card that is insured when shopping online (as opposed to the debit card connected to your bank current account). If your credit card is compromised, it is insured and you are, typically, not liable for any loss. Your debit card is a conduit to your current account which if compromised could give criminals access to your current account funds.
These goals can be short-term (1-3 months), medium-term (2-3 months) and long-term (6-12 months) to support savings. Identify some key goals and save towards them – by doing this a little and often, your savings can really build up.
If you require funding for college or student travel, firstly exhaust all other options before borrowing. Typically, student loans in Ireland are repaid during the course of college (capital repayments are not deferred until after graduation as in other countries).
Borrowing for a car or student travel in college may put you under financial pressure during term time as you meet other commitments. If you do decide to look for a loan, shop around and look for the best interest rate.
Also, speak to your local credit union. Be aware that all borrowing contributes to your credit history, which will impact future loan decisions. It is easy to get black marks if you miss repayments. If you do find yourself unable to make a repayment, contact your financial provider immediately.
Credit cards can be beneficial for students. Shop around for the best rate and be sure to pay off your card each month. If you can’t do this, it’s a sign you are living beyond your means and it will end up costing you over the longer term. If you let your credit card balance build up, it can be a bit overwhelming and hard to pay it back. Always get help early on if you find yourself in this situation. Ultimately, try to only spend on credit what you can pay off now – or what you know you can pay off before the end of the month.