For many, a new year means a new slate, and that includes getting on top of your finances. Money management can be tough, especially if you’re a college student or navigating personal finances for the first time after graduation. However, you’ve got this! The new year is a great time to start building new habits, including financial ones. Here are a few practical tips and healthy habits that can help you feel more confident about your finances this year and beyond.
By: Celina Aquino
Set a Budget to Keep Track of Your Spending
Rule number one: Budget your money. No matter what your background or occupation, living paycheck to paycheck is not an ideal situation. Avoid putting yourself in this type of financial stress if you can, and create a budget to help you keep track of your income and spending. Creating a budget is an easy way to start managing your money wisely, so you don’t find yourself with only $20 in your bank account as you wait for your next paycheck.
Not sure how to track your income and expenses? Google Sheets is a great tool to use if you’re a beginner since you can create a template in minutes (it’s really that simple!). Start by splitting your overall budget into two main categories: income and expenses. When you’re ready to make your budget document more complex, go ahead and add subcategories. You can include categories like health and wellness, groceries, travel, clothing, gifts, and don’t forget to include insurance like auto and health. Creating categories that reflect your lifestyle and documenting your spending habits in an organized document will help you prioritize bills and other important expenses.
Deposit Money Into Your Savings Account Every Payday
As you budget your money, be sure to set aside a specific amount for your savings account. You can start with a smaller amount like $50, which you can then increase over time, or commit to $100. Note that your bank probably has an option for automatic transfers to make the process easier. This allows you to designate a certain amount to be transferred to your savings account automatically, so you don’t have to stress about it every time!
Emergencies can happen at any point in life, and when it comes to your personal finances, it’s better to be safe than sorry. For example, when my workplace changed its office hours during the lockdown last spring, I ended up working fewer hours than usual; suddenly, I wasn’t bringing in as much income as before. Fortunately, I had enough money in my savings to cover my rent, bills, and groceries for the time being. You never know what could happen, whether it’s a career pivot or a big life change, so be prepared for the “worst” and think ahead.
Schedule Payments for Your Bills in Advance
Paying my bills early is one of the best financial moves I made last year. I used to forget when my bills would be due, and before I knew it, I’d be late and incur fees. You don’t want to pay extra money for forgetting you had bills to pay, so make life easier by scheduling payments in advance.
Start by making a list of your monthly bills along with their due dates. For example, if you get paid biweekly, split up your list and take into consideration the due date and the amount due. It’s okay if you’re not able to pay all your bills at once on an earlier date, but as long as your payments are submitted before the deadline, you’re set.
Be Conscious of Your Credit Card Usage
Having a credit card can be amazing and all — until it’s time to pay off your balance and suddenly you realize how much you spent while shopping last weekend. It’s generally a good idea to keep your usage at 20 percent and under. Although it can be difficult not to splurge, remember that your credit card should not be used for impulse buying; instead, treat it as an emergency fund.
I get it; sometimes you can’t help but swipe your credit card during an unplanned shopping spree. Just be sure you’ll be able to pay off your balance, and try not to rack up credit card debt if you know you’re in a sticky financial situation. Once it piles up, you’ll feel even more stressed, which is the last thing you want!
Limit Your Screen Time
If you’re constantly scrolling through Instagram and TikTok all day, you’re bound to see dozens of things that look super appealing to spend your money on. Admittedly, I’m totally guilty of this — if I see my favorite influencer sporting a sweatsuit, you best believe I’m going check the tagged store to cop myself a set, too. That’s what you’d call an “impulse buy,” and social media is often a huge culprit.
This is why it’s important to be mindful of your screen time, and start recognizing when you actually need something versus something that looks cool on Instagram, but might just be an impulse buy or unnecessary splurge. Following influencers on social media can be hard at times, because they show us must-buy items and make everything look appealing. However, to avoid making too many big purchases, try limiting your screen time. Chances are, after some time away from doomscrolling, you won’t be as tempted to order a new pair of boots or add another top to your Amazon cart.
Say “no” More Than You Say “yes” to Yourself
If you’re thinking about treating yourself, more power to you! However, if you’re trying to get on top of your finances, be mindful of when and how you indulge. Trust me, I’m all for spoiling myself, but sometimes it’s a game-changer to exercise moderation and learn to say “no” to yourself. I used to always find a way to justify my splurges, and I’m starting to unlearn that longtime habit. For example, whenever I’d have a bad day, I’d cope by shopping simply because it cheered me up. There were times I instantly regretted paying over $100 on one order, and I’d realize hours later that I regretted it, and was better off saving my money. Now, instead of just spending money mindlessly, I’ve started asking myself if a purchase really makes me happy.
Please, and I can’t emphasize this enough, don’t make purely emotional purchases. While self-care gifts can give you a quick burst of happiness, spending your money wisely is far more “healthy” in the long-term, and will set you up to be more responsible in college and beyond.
While the new year is an ideal time to start setting up financially healthy habits, don’t feel like you have to do everything perfectly right away. Navigating your personal finances is an ongoing learning process, especially if you’re a college student or figuring things out for the first time. You can incorporate financially healthy habits with your other mindful habits at any time. Working towards improving yourself is not always linear; you’ll make mistakes and learn new lessons, and that’s perfectly okay.