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Budgeting basics for university students

Personal Finance
Back in the days , for many of us, enrolling into university gave us a first taste of true independence.

Back in the days , for many of us, enrolling into university gave us a first taste of true independence.


Apart from the freedom from daily scrutiny of personal activities by parents, college life gave us our first taste of financial independence.

During our time, the university grant system was functional and we did not need to work our way through college to pay tuition and accommodation. We got paid to learn.

However, this has changed and for many college students, just trying to manage the many day-to-day expenses of living on their own is a huge challenge.

For many who are attending college now, college is certainly more expensive than they thought it would be.

Besides tuition costs and accommodation, food and transport, university students now have to contend with other expenses within their meager resources.

With many students coming from generally less to do family backgrounds, it has become more important for one to be able to manage their finances tightly.

Without access to government student grants, or student bank loans or credit cards, the “fiscal space” for the average college student is extremely limited.

It is in this context that I am motivated today, to give a few tips to our college students which I hope will help them manage their financial well being through college.

Since the decisions that students make now can impact their financial standing long after they graduate, they can follow some of these tips to lay the building blocks for a strong financial future:

Create a budget and stick to it Before you head off to college, sit down and think carefully about how you are going to handle all of your college-related expenses, and how much money you will need to cover the basics. Sit down with a key family member, especially the one who will help you pay for your tuition to estimate your annual costs of attending university will be. Set out clearly what your needs are versus your wants. Needs are those things that you will not be able to do without, in order to successfully go through college.

Wants are those items that you simply desire. These should assume lesser priority on your budget. For example , you will need to pay your fees and buy food etc, and most university students these days need a basic laptop to enable them to work on research and assignments, but however they do not “need” the latest Sumsung galaxy or iPhone. Most students these days will confuse needs and wants.

Prioritise the basics, tuition fees, accommodation, transport, food, medical expenses, books and so on. When you have come to a number add onto that, a haircut of say 10% to cover unforeseen expenses. This additional amount is what is called a contingency amount.

When this is done, complete the budgetary process by setting up ground rules upfront which you should stick to, so as to avoid confusion and missed payments down the road. In simple terms this is the budget and once its set, stick to it. In short, live within your means. Let us discuss some of the basic rules that help you stick to a budget.

Don’t overspend The enemy of the budget is spending more than you need to. Avoid impulsive spending so that you do not buy things you do not need. Think a few times whether you really need something before you make a purchase. Avoid situations where you will needlessly have to spend money. Find creative ways to cut expenses After a few weeks in college, you will find sometimes that your expenses may end up being higher than you expected.

Find creative ways reduce costs. If textbooks are too expensive, consider renting them instead of buying. You can also create a textbook club with classmates where you agree each to buy a different core textbook rather and sharing these among your selves rather than each of you buying a full set.

When you move on the next course level, sell or trade-in the old text books for the ones that you need for the new level.

Such creativity can go a long way in managing money—both during college and after. Open and maintain a bank account Managing money is easier if you always carry small amounts of cash on your person. It is natural to overspend if you have loads of cash on you all the time. Feeling “liquid” always results in overspending. Opening and maintaining a bank account will help you avoid unnecessary expenditures as you will not have easy access to your money.

However, when you open a bank account make sure that it is a savings account or a special student account that has minimal or no charges.

Make sure you get an ATM card for your account. This gives you access to your money via your bank’s ATM network, and point of sale machines and internet and mobile banking services. This will help make managing your money easier and less costly for you.

Avoid debt Debt is tempting and most students are tempted to go into debt to finance spending habits outside their means. Try to avoid borrowing money unless you truly need to. Rather, open and maintain a savings account to save money for major unforeseen purchases, rather than building up debt or taking out a loans.

This requires the discipline of planning ahead, which will also help you make smarter financial decisions that set you up for success after you graduate. Getting into irresponsible debt may harm your integrity and financial reputation if you start failing to pay these debts.

This may affect your credit standing in future. Many research studies have also shown that people who get into serious debt during college years fall into a lifelong debt trap as they develop this into a habit.

Job hunt early. Most students will find that they have a lot of free time on their hands, If you can, try and use this time productively by taking up part time work, especially during vacations.

Part-time jobs will definitely help students manage expenses and gain valuable work experience to build their CVs. Consider supplementing your university course with a related job that might help feed future career plans. Check in with your industrial attachment liaison office to help you find the right opportunities.

Develop connections with other professionals in your desired career path to help build your network. However, do not despair if you cannot get a part time job that is related to your line of study. Getting any job if you are lucky, helps you gain other valuable life skills such as relating to others in a work environment, and delivering on deadlines, meeting customer expectations etc.

Find and take advantage of student banking accounts There are Bank accounts designed specifically for students that can help make managing money easier. Talk to your bank and ask them for a student savings account that will attract no monthly service fees as long as you are enrolled in an eligible accredited institution of higher learning.

Having an account avoids you spending money from your pillow or pocket. Conducting responsible banking will also help the student build a sound financial history that will assist them in future.

Educate yourself on money issues Being financially literate is an asset. Do not rely entirely on your “Introduction to Economics” course to give you all of the knowledge that you need to get through your four years at university on solid financial ground.

Use the Internet extensively to find out about how you can manage money. Talk to your banker and read newspapers, magazines and books on budgeting, and managing money. You will pick useful tips along the way on the basics of smart budgeting, saving and investing.

Clive Mphambela is a banker and financial advisor, he writes in his capacity as Advocacy Officer for the Bankers Association of Zimbabwe.