For many students, managing money effectively can seem like a daunting task. Between tuition fees, living costs, textbooks, and the occasional night out, it can be hard to make ends meet. However, budgeting and saving are essential skills that every student should master. Financial expert Ernest Varvoutis offers practical advice to help students take control of their finances, set themselves up for success, and avoid common money pitfalls.
1. Create a Realistic Budget
The first step in managing your money as a student is to create a budget. Ernest Varvoutis emphasizes that a realistic budget is key to understanding where your money is going and ensuring that you can cover all your essential expenses without overspending. Start by listing all your sources of income, whether it’s from a part-time job, student loans, or allowances.
Once you have a clear picture of your income, break down your expenses into categories such as rent, utilities, food, transportation, and entertainment. Be honest with yourself about your spending habits and set limits for each category. For example, you may want to allocate a certain amount for dining out each month but be sure to leave room for saving as well.
Varvoutis suggests using budgeting tools like apps or spreadsheets to keep track of your income and expenses. Tracking your spending will help you stay within your budget and avoid unnecessary financial stress.
2. Prioritize Saving, Even in Small Amounts
While saving might seem like a challenge when you’re living on a tight budget, Ernest Varvoutis encourages students to save even small amounts. The key to building a solid savings habit is consistency, not the size of the amount. Even setting aside $20 or $50 per month can make a significant difference over time.
Start by establishing an emergency fund, which should cover unexpected expenses like medical bills, car repairs, or job loss. Aim to save at least three to six months’ worth of living expenses. Having an emergency fund provides a financial cushion and can help you avoid taking on debt in a crisis.
Once you have your emergency fund in place, Varvoutis recommends contributing to other savings goals, such as a vacation fund or long-term savings for your future.
3. Cut Down on Non-Essential Spending
A crucial aspect of budgeting and saving is reducing unnecessary spending. Ernest Varvoutis suggests that students take a close look at their discretionary spending—such as eating out, subscription services, and impulse purchases—and find areas where they can cut back.
For example, cooking meals at home instead of dining out can save you hundreds of dollars a month. Likewise, canceling unused subscription services or limiting online shopping can free up money for savings.
It’s also wise to be mindful of lifestyle inflation. As you earn more money through a part-time job or internship, resist the temptation to increase your spending. Instead, put the extra money toward your savings goals or use it to pay down debt.
4. Take Advantage of Student Discounts
One way to save money as a student is by utilizing student discounts. Many businesses offer discounts on everything from clothing and electronics to food and transportation. Ernest Varvoutis advises students to always ask about student discounts and take full advantage of these deals.
There are also websites and apps like UNiDAYS, Student Beans, and ID.me that help students find discounts on products and services. By incorporating student discounts into your budget, you can make your money go further while still enjoying the things you love.
5. Avoid High-Interest Debt
Credit cards and loans can be useful financial tools, but they can also lead to serious debt if not used responsibly. Ernest Varvoutis cautions students to avoid taking on high-interest debt, especially when it comes to credit cards.
If you do use a credit card, always pay off your balance in full each month to avoid paying interest. If you’re unable to pay off your entire balance, try to keep your credit utilization low by paying off as much as you can each month. High-interest debt can quickly spiral out of control and create long-term financial problems, so it’s crucial to manage your credit card usage wisely.
Additionally, Varvoutis advises students to minimize borrowing for non-essential expenses. Use student loans only for tuition and educational expenses, and look for scholarships and grants to minimize the amount you need to borrow.
6. Build Credit Early (But Cautiously)
Establishing good credit early in life is important, but Ernest Varvoutis stresses that students should approach it with caution. Building a solid credit history can help you secure favorable loans, credit cards, and even lower insurance premiums later in life.
One way to start building credit is by applying for a student credit card, which typically has lower credit limits and less stringent requirements. However, it’s important to use the card responsibly—pay your bills on time and avoid spending more than you can afford to repay.
Alternatively, some students choose to become authorized users on their parents’ credit cards to start building credit with no direct financial responsibility.
7. Invest in Your Future
Although investing might not seem like an immediate concern for students, Ernest Varvoutis encourages students to start investing as early as possible. Compound interest works best when you give your money time to grow, so the earlier you start, the better.
If you have a part-time job or freelance income, consider contributing to a Roth IRA or setting up an investment account. Many investment platforms offer low-cost options for beginners, and there are even apps that help you invest small amounts automatically.
Investing in your future can seem overwhelming at first, but it’s a powerful way to build wealth over time. Even small contributions can yield significant returns in the long run.
Conclusion
Managing money as a student doesn’t have to be difficult. By following Ernest Varvoutis advice on budgeting and saving, students can develop strong financial habits that will set them up for success. Creating a budget, prioritizing savings, avoiding high-interest debt, and taking advantage of student discounts are all crucial steps in building a solid financial foundation. With careful planning and discipline, students can confidently manage their finances and prepare for a financially secure future.