Most students nowadays aren’t just concerned with the grade on their report. They are also, understandably, more anxious about the number in their back account. With skyrocketing inflation and the looming global recession, students are under immense pressure to manage their finances smartly and effectively to deal with the cost-of-living crisis that’s pummelling economies world-wide.
This is actually quite a tall order since most students have had little to no formal training in managing their own money. It might not be what you want to hear, but it’s essential that as a student you make time to get properly educated on the basics of personal finance.
If you can find one, a good program in financial education will cover all the fundamental aspects of managing your money well, but the best ones will also help you understand the mindset and attitude that is needed to go with those skills. That is the key to changing your behaviour in the long run.
Saying that, it’s important to keep in mind that managing your finances smartly and responsibly isn’t a sprint, it’s more of a marathon. It requires long-term thinking and financial habits that support that. Impulse control and delayed gratification are central to staying on top of your personal finances.
However, they are not easy, especially given our culture of instant gratification. Training yourself to resist temptation and hold out for a better reward in the future is a skill worth cultivating and not just for better finances. Learning these skills has also shown to correlate with better academic performance, higher paying jobs, better health, and more successful relationships.
So, with these three concepts: long-term thinking, impulse control and delayed gratification underpinning good personal finance practices, how can you put these into practice during an oncoming cost of living crisis?
Finance tips | Be wary of taking on debt
Whether through credit cards, car loans or personal loans; with the cost of credit increasing, be cautious before considering taking on any form of debt. Is it prudent and consistent with your financial goals for the future?
Be extra vigilant with all financial transactions
From credit card and bank statements to grocery and restaurant bills, go through everything with a fine-tooth comb. Aside from increasing the chance of you picking up on fraudulent transactions, this has the added benefit of making you keenly aware of the prices and costs involved. In today’s frictionless payment culture, simply swiping or tapping your payment cards insulates us from knowing exactly how much we’re spending, which of course makes us spend more.
Pay off all credit card balances in full and on time
Though this comes under the aspect of taking on debt, it’s significant enough to bear flagging and repeating. Unpaid balances and late payments are the first steps in a rapid downward spiral toward financial ruin. It’s important to take steps to prevent this early on – by being careful not to buy anything you can’t pay off in full at the end of the month, and by activating trip wires to ensure all payments are made on-time.
Maintain a budget
This habit of planning for and allocating money goes a long way to developing financial discipline. It sets up guard-rails for over-spending and can help you stay aware of how well you are progressing toward your financial goals. The process of deciding how much to spend and on what, will give you a sense of control and successfully managing and sticking to a budget will mean a well-deserved sense of accomplishment. Budgeting also tends to sharpen important money skills such as bargain hunting, comparison shopping and price negotiation.
Be mindful of social media use
With its hyper-targeted advertising, and algorithms that seem to exactly know what you want even before you do, social media platforms make it increasingly difficult to resist buying temptations. It’s hard to not fall prey to these tantalising baits and that means even the best laid budgeting plans will suffer a massive setback if students aren’t careful.
Social media is also guilty of promoting a ‘Keep up with the Joneses’ lifestyle. Watching the deeply enviable lives of celebrities, influencers and friends paraded before you in high definition can make ‘FOMO’ very real. Being aware of how insidiously this works to trigger your spending impulses is a necessary bulwark against the constant rise of social media use.
These tactical steps, plus working on your impulse control, delayed gratification and long-term thinking ensure the best chance of success, not just against the current cost-of-living crisis but also against the financial challenges you are bound to face on their journey into adulthood too.
About the author:
Marilyn L. Pinto is founder of KFI Global and specialises in teaching teenagers how to make smarter money decisions and equipping them with the knowledge and skills to secure their financial futures. Often people shy away from talking about money, but Marilyn is on a mission to challenge that norm, to make financial literacy a priority in everyone’s lives.
Marilyn’s new book, Smarter Richer Braver explores the importance of teaching financial literacy and skills from an early age.