What Students Are Learning about Money Management in Today’s Economy
The troubled economy has caused serious financial problems for people in every aspect of life, and college students – a time in our lives when money was already stretched to its limits – can find themselves in a very tough position. Some of the lessons these students are learning about money management are coming through direct experience, while others are taking classes to learn more about budgeting and investments. Either way, the lessons students learn in today’s economy can have a huge impact on the rest of their lives.
Between tuition, textbooks, living expenses, and the occasional expenditure on something that might actually be considered fun, students must carefully manage their expenses and income to ensure that they always have enough to pay the bills and maintain a steady supply of cold cereal and other college delicacies.
Harsh Lessons in a Recession
One of the first lessons that college students are learning is that the economy is changing a lot of industries, and they may not be able to make the kind of money they had expected once they graduate with their management degree. This means that any debts that accrue during their college years may become an even bigger problem once they join the job force.
That doesn’t mean all hope is lost for college students, though, because the next lesson they learn is that with careful money management it is possible to live out your college life without taking on more debt than is strictly necessary. For many of these students, college will be their first experience with budgeting their own money. Until now, a lot of these students always had something to fall back on if they ran out of money. Now, they’re on their own and have to learn some tough lessons about real-world money management.
Important Money Management Techniques
The recession has made proper money management more important than ever, and college is the perfect time to develop the necessary skills to take them through the rest of their lives. Budgeting, saving, and good debt are principles that work both in and outside of college. It’s simply a matter of taking a careful approach and following some important money management techniques.
1. 1. Track all expenditures – A functional budget requires detailed data on your annual expenses. This could include the coffee you purchase at the cafeteria or the amount you are spending on textbooks. Every expenditure needs to be tracked so you can get the big picture of your current financial situation.
2. 2. Compare incoming to outgoing – Most students are already accustomed to living life on a shoestring budget, but it is important to make sure that you always have enough money to cover your expenses.
3. 3. Don’t give in to credit cards – A student loan is enough of a financial burden, and a lot of students have succumbed to even higher debts because of flagrant credit card use. They may seem like the answer to your financial woes as a student, but they can cause more problems than they solve.
4. 4. Understand the difference between good and bad debt – A college loan is considered good debt because it is an investment in your future. Credit card debt, on the other hand, is bad because it is most often used on consumables that will not generate more money down the road.
5. 5. Avoid impulse buys – College students often feel a sense of financial freedom when they first move away, but unfortunately it can take a couple hard lessons before they understand their financial responsibility. Always think twice about your purchases and make sure that it is something you need, and something you have the finances to cover.
Despite the downed economy, it is possible for students to continue living a financially secure life – even if it does require some active budgeting and thoughtful purchasing. When students keep an eye on their finances and learn about real money management, they’ll be ready to handle some of the difficulties of the current job market.
