It is a fact that one of the aspects of choosing to go to university is unfortunately acquiring some student loan debt.
So, being a student it is useful to come up with short-term financial goals that you need to look after. If you know the basics of personal finance management, then you would also know that there are some other financial goals that you should focus on while studying!
But how to set goals when Covid-19 is still hanging around? Does this have any effect on your financial goals? Let’s find out in the discussion.
1. Start preparing a budget
First of all, starting a budget is a smart financial goal and a great skill, which will make you understand where your money is going every month. A monthly budget is a document that will help you to track your finances.
Starting this process is simple. Analyze your bank statement for the last 3 months and categorize all your costs into different groups. Then figure out your monthly average spending for the last 3 months in each category.
The amount you get will be your budget, for each category, per month. Make sure you do not spend a penny more than that amount in the next 3 months. If you can maintain this, you are going on the right track. For the next 3 months, your target should be spending lower than the average budget. If you get successful in that too, gradually you’ll start saving from the total budget allotted.
There are a few categories from which students may cut off expenses. They are:
Starting a good budgeting habit can help you to reduce areas where you are wasting money.
2. Initiate first time investment
2021 is the year for university students to initiate their first investment. Small investments that you might make now won't make you a millionaire, but it can help you to understand the investment items, the market, the options for small and big investments shortly. By investing a small amount from your savings, you may start making money for the future. So, it can be said that you should always be investing, no matter how much money you have in your wallet.
For personal finance development, investing money is equally important as debt pay off. If being a student you have enough savings to engage in small investment options, go for it. With time you’ll gather enough knowledge and resources to invest in big, more profitable sectors.
3. Build a good credit
If you want to buy some item on credit, that means you’re borrowing the money from a third party and using the amount to purchase a thing or service. You need to pay back the money within a certain period unless you want to pay interest over that amount borrowed.
Normally, people take out credit via credit cards or loans. If you are paying back that borrowed money (credit card bill or loan instalments), you’ll gradually build a good payment history. This history of paying back borrowed money can help you to build up your credit score.
If being a student you’ve never taken out a loan or applied for a credit card, then it is the right time for you to do so. But, without your existing credit score, it is impossible to get a good credit card or cheap interest loan.
So, how to get this done? You may visit the credit card company and apply for a simple credit card. They’ll normally approve a card with a small credit limit. Use that credit limit to purchase items, and once the bill is generated, pay the bill every month within time. That’s it. You’ll start to build up a credit history that will increase with time.
If the credit card company does not approve your credit card application, you may apply for a personal loan, ask your dear ones to become a co-signer or sign up for a store credit card.
Managing your cash is very important for building credit. You can’t save a good amount of money every month and make credit card bills or loan interest payments, then your credit will have a negative effect.
It is a fact that the pandemic has pushed billions around the world to focus on their physical health and physical well-being, it has also affected the financial health and well-being of millions globally. With the loss of income due to the lockdown and downfall of the economy, a large percentage of consumers have less income to pay their bills. As a result, the consumer credit score has been affected severely.
4. Stay out of debt during university
Being a student you don’t want to be in knee-deep debt. But, it is also true that common students often are.
The prime reason for that issue is overspending via credit cards. University students, most of the time, do not control their urges to spend money on unnecessary things such as entertainment, holidays, or alcohol. Due to overspending through credit cards, they might find themselves under huge credit card debts.
The easiest way to handle credit card debt is by choosing the credit card consolidation options. You may take out professional help, or if you have a decent credit score you may apply for a 0% APR balance transfer card. This way you may manage your money every month, and save more on interest payments. Consider every possible way to get out of credit card debts. Being debt-free as a student is great, trust me!
The drop in overall credit card debt is a strong indicator that the pandemic has affected consumer spending habits.
5. Have an emergency fund
Your next smart financial goal as a university student should be building an emergency fund. There are multiple reasons why you should consider creating this. You may start your fund just by saving something like £500 just in case things do start to go wrong. Having an emergency fund can help you to avoid debt as you have a decent amount in your hands when you face any sudden financial problem.
During the pandemic, people have realised the true necessity of an emergency fund.
Patricia Sanders is a professional content developer and a regular contributor to debtconsolidationcare. She specializes in the financial niche and is well known for her unique financial tips that can be very effective. She always tries to help people, suffering from financial hardships, through her writing. Her continuous effort has earned her recognition and honor in the financial blogging industry. Besides writing, she loves to travel and gather information on various financial topics. To get in touch with her (or if you have any questions regarding this article) email at firstname.lastname@example.org.
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