With the amount of juggling college students have to do with their time,
most do not spend much time making financial plans. Thinking about the
future from a financial perspective is a good idea. Discussed below are
seven simple steps that can get you into the right track, see how they
can work for you:
Set Your Financial Goals
Setting a financial goal starts with your life goal. Things you want
to do, places you want to visit, things you want to accomplish in
the next few years are some items you might want list. Then put a
time frame and approximate monetary amount you think each item might
need. Another thing you will want to consider is the expenses that
occur between the time you graduate from college and you get a job.
This will give you a rough idea of what and when your expenses might
be.
Now figure out how much money you will be making in the same time
frame (even after graduation). Consider the student loans that you
might have as well as the living expenses.
When you compare your estimated expenses with your estimated income,
this is the point of financial planning. You need to have two perspectives
on your money: money for daily living expenses and money to pay for
your goals.
Pay Yourself First
The most important category in your budget is you. So whenever you
receive money as an income, put some amount aside to fund your goals,
even before paying your bills. A savings account or a mutual fund
account with an initial investment and periodic contribution can be
a strong foundation to financial freedom. No matter how small the
start amount is, what counts is that you have a start and a plan.
An important addition to your “personal” account can be
the tax return you get every year.
Take Control with a Budget
Knowing what you’ve got and where it is going is a basic skill
in money management. Budget is a simple tool that can be of great
assistance in financial planning since it shows your expenses, incomes,
and the difference between the two.
Your budget must be flexible with your needs and circumstances, and
dynamic to be a part of your life.
Here are some tips with budgeting:
•Differentiate the things you need and the things you want.
•Keep your long-term goals in mind and do not let short-term
desires interfere.
•Set limit to miscellaneous expenses and stick to it.
•Don’t hesitate to find ways to cut back on your expenses
like rent (find a roommate) or transportation (walk, bike, car pool).
•Save up for large purchases when possible.
•Set some emergency fund.
•Be honest and realistic to yourself.
•Keep receipts of your major purchases, loan agreements, insurance,
banking, investment, and tax records at a convenient place.
•Set aside some time to pay your bills, update your budget,
and balance your checkbook.
Get to Know Your Bank
Having a checking account is a good start to a good credit history.
A savings account is an initiative to accomplishing your goals. You
need an established relationship with your bank as well. Get brochures
about their services. This gives you an idea on the bank’s policies
regarding investments and loans.
Establish Good Credit
A good credit history is the foundation on which a strong financial
resume is built. Credit cards are convenient for large purchases and
unexpected expenses. But if credit is considered an extension of income,
it can be a problem. Your income potential, stability, expenses, and
debt record are some variable considered by companies when you apply
for credit. Having a credit card is a good idea but you have to be
responsible for the obligations that come with it.
Here are some tips that may make you a better credit card
bearer:
•Keep track of your balances.
•Limit the number of credit cards you have.
•Set a personal, realistic credit limit that you do not exceed.
•Plan your credit use ahead.
Expand Your Financial Education
There is a lot to know about managing and establishing a good financial
base. Books, magazines, and lots of websites offer vast amount of
information on money management and investing. Some topics to investigate
might include:
•Salaries and benefit packages for employees
•Cost of living in different parts of the country
•Different types of insurance
•Cash flow, equity, taxes
•Investments
•Retirement planning
