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Money Tips College Freshmen Should Know

Money Tips College Freshmen Should Know

Take note of some of these tips, as some of them will serve you well later in life too. Money tips are needed in college because students have severely limited funds, but many of the tips can also be used as you get older.

Share car journeys, especially to the store

This is a tip that will save you money in the long run. When your student friends are going to the grocery store, share a car ride, with each person chipping in for gas. The more people that go, then the more economical the journey becomes—meaning that all of the students save money.

Keep your money in the bank

Money is safer in a bank than in your shared housing or dorm. Theft is a problem everywhere, and not just in colleges and in dorms. Criminal sorts are attracted to colleges and college dorms, where trusting or drunk students are ripe for the robbing. They will take anything from your car keys and laptop, to the loose change you threw on your desk. If you live with other students or share a dorm, then your housemates/roommate’s next lover may be a criminal on the job.

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Having money means not spending

How rich a person becomes has less to do with how much they earn and more to do with how much they save. The reasoning behind this could fill a best UK essay. Suffice it to say that the money rich people have is through the money they have not spent, and yet your mind has been conditioned to spend, spend, spend. Test yourself and your friends to see how conditioned they are. Ask them, if you won $20,000 tomorrow, what would you do with it? If they do not say, “save it” or “put it in the bank”, then they are conditioned to spend.

As soon as most people get any money, they instantly start deciding how to get rid of it (spend it). And, the chances are that most of your friends would start listing off the ways they would get rid of their money as quickly as they got it.

Snack if you must, but snack cheaply

Convenience food is the enemy of the student. If you want to save money, then get into the habit of having three meals per day and no more. Make sure that they are substantial meals that fill you up so you won’t be tempted to snack during the day, which is going to cost you money.

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Don’t sell anything

This tip is short because it needs to be remembered. Students will often sell their items to fellow students on eBay and Amazon, and they think that they are being shrewd, in fact they do not realize they are losing money.

If you were to write an essay on economics, you may first take note of assets. Each item you own is an asset and has its place in saving you money. You may think that selling twenty of your DVDs may bring in some quick cash, however over the next year you are going to become bored. And, one of those DVDs may have helped stop you running out and buying other DVDs, or console games, or may have provided you and your partner with a cheap night in, instead of an expensive night out.

Only sell items if you are sure you can make a lot more than they are worth, and then repurchase them cheaply so that you may keep the profit.

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Keep your car well maintained

A lack of oil is the difference between yearly maintenance and having to buy a new car. The air in your tire will dictate how much fuel your car uses. Having your boot or car filled with items you do not need will cost you money in fuel. In Britain, a study proved that simply having a moustache will cost you $15 per year (based on the extra weight, and adjusted for current fuel prices).

Learn how to swap and borrow

Do it with people that you trust. The worst thing you can do is lend to a person who purposefully, or accidentally, forgets you have leant them something. Swapping console games and DVDs is a great way of saving money. As is lending and borrowing things such as video camera, professional cameras, cars and even space in a freezer.

Energy creation devices are too expensive

A solar-powered mobile phone battery charger may seem like a wise investment, but it is not. The cheap Chinese-made ones are only trickle chargers to keep the battery topped up (read the small print on the instructions). Any device that will charge your phone battery from dead, and then stop charging when it is full, is going to cost you a lot of money. Similar devices are equally as ineffective, such as phone and laptop chargers that use kinetic energy.

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Gather in groups

You will find that you do not need the pubs, cinemas, or other entertainment facilities if you gather in groups of friends. Many happy hours may be spent on the grass watching your team or just having a chat with friends. Many groups of happy teens have spent hours having a Jackass movie marathon and maybe having a drink every time the little fella comes on screen (he is the only reason those movies are watchable).

I hope these tips will be useful for you and you’ll be able to save some cash and learn how to spend your money and time wisely.

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Last Updated on September 2, 2020

How to Set Financial Goals and Actually Meet Them

How to Set Financial Goals and Actually Meet Them

Personal finances can push anyone to the point of extreme anxiety and worry. Easier said than done, planning finances is not an egg meant for everyone’s basket. That’s why most of us are often living pay check to pay check. But did anyone tell you that it is actually not a tough task to meet your financial goals?

In this article, we will explore ways to set financial goals and actually meet them with ease.

4 Steps to Setting Financial Goals

Though setting financial goals might seem to be a daunting task, if one has the will and clarity of thought, it is rather easy. Try using these steps to get you started.

1. Be Clear About the Objectives

Any goal without a clear objective is nothing more than a pipe dream, and this couldn’t be more true for financial matters.

It is often said that savings is nothing but deferred consumption. Therefore, if you are saving today, then you should be crystal clear about what it’s for. It could be anything, including your child’s education, retirement, marriage, that dream vacation, fancy car, etc.

Once the objective is clear, put a monetary value to that objective and the time frame. The important point at this step of goal setting is to list all the objectives that you foresee in the future and put a value to each.

2. Keep Goals Realistic

It’s good to be an optimistic person but being a Pollyanna is not desirable. Similarly, while it might be a good thing to keep your financial goals a bit aggressive, going beyond what you can realistically achieve will definitely hurt your chances of making meaningful progress.

It’s important that you keep your goals realistic, as it will help you stay the course and keep you motivated throughout the journey.

3. Account for Inflation

Ronald Reagan once said: “Inflation is as violent as a mugger, as frightening as an armed robber and as deadly as a hitman.” This quote sums up what inflation could do your financial goals.

Therefore, account for inflation[1] whenever you are putting a monetary value to a financial objective that is far into the future.

For example, if one of your financial goal is your son’s college education, which is 15 years from now, then inflation would increase the monetary burden by more than 50% if inflation is a mere 3%. Always account for this to avoid falling short of your goals.

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4. Short Term Vs Long Term

Just like every calorie is not the same, the approach to achieving every financial goal will not be the same. It’s important to bifurcate goals into short-term and long-term.

As a rule of thumb, any financial goal that is due in next 3 years should be termed as a short-term goal. Any longer duration goals are to be classified as long-term goals. This bifurcation of goals into short-term vs long-term will help in choosing the right investment instrument to achieve them.

By now, you should be ready with your list of financial goals. Now, it’s time to go all out and achieve them.

How to Achieve Your Financial Goals

Whenever we talk about chasing any financial goal, it is usually a two-step process:

  • Ensuring healthy savings
  • Making smart investments

You will need to save enough and invest those savings wisely so that they grow over a period of time to help you achieve goals.

Ensuring Healthy Savings

Self-realization is the best form of realization, and unless you decide what your current financial position is, you aren’t heading anywhere.

This is the focal point from where you start your journey of achieving financial goals.

1. Track Expenses

The first and the foremost thing to be done is to track your spending. Use any of the expense tracking mobile apps to record your expenses. Once you start doing it diligently, you will be surprised by how small expenses add up to a sizable amount.

Also categorize those expenses into different buckets so that you know which bucket is eating most of your pay check. This record keeping will pave the way for cutting down on un-wanted expenses and pumping up your savings rate.

If you’re not sure where to start when tracking expenses, this article may be able to help.

2. Pay Yourself First

Generally, savings come after all the expenses have been taken care of. This is a classic mistake when setting financial goals. We pay ourselves last!

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Ideally, this should be planned upside down. We should be paying ourselves first and then to the world, i.e. we should be taking out the planned saving amount first and manage all the expenses from the rest.

The best way to actually implement this is to put the savings on automatic mode, i.e. money flowing automatically into different financial instruments (mutual funds, retirement accounts, etc) every month.

Taking the automatic route will help release some control and compel us to manage what’s left, increasing the savings rate.

3. Make a Plan and Vow to Stick With It

Learning to create a budget is the best way to get around the uncertainty that financial plans always pose. Decide in advance how spending has to be organized

Nowadays, several money management apps can help you do this automatically.

At first, you may not be able to stick to your plans completely, but don’t let that become a reason why you stop budgeting entirely.

Make use of technology solutions you like. Explore options and alternatives that let you make use of the available wallet options, and choose the one that suits you the most. In time, you will get accustomed to making use of these solutions.

You will find that they make it simpler for you to follow your plan, which would have been difficult otherwise.

4. Make Savings a Habit and Not a Goal

In the book Nudge, authors Richard Thaler and Cass Sunstein advocate that, in order to achieve any goal, it should be broken down into habits since habits are more intuitive for people to adapt to.

Make savings a habit rather than a goal. While it might seem to be counterintuitive to many, there are some deft ways of doing it. For example:

  • Always eat out (if at all) during weekdays rather than weekends. Weekends are more expensive.
  • If you are a travel buff, try to travel during off-season. You’ll spend significantly less.
  • If you go shopping, always look out for coupons and see where can you get the best deal.

The key point is to imbibe the action that results in savings rather than on the savings itself, which is the outcome. Focusing on the outcome will bring out the feeling of sacrifice, which will be harder to sustain over a period of time.

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5. Talk About It

Sticking to the saving schedule (to achieve financial goals) is not an easy journey. There will be many distractions from those who are not aligned with your mission.

Therefore, in order to stay the course, surround yourself with people who are also on the same bandwagon. Daily discussions with them will keep you motivated to move forward.

6. Maintain a Journal

For some people, writing helps a great deal in making sure that they achieve what they plan.

If you are one of them, maintain a proper journal, where you write down your goals and also jot down the extent to which you managed to meet them. This will help you in reviewing how far you have come and which goals you have met.

When you have a written commitment on paper, you are going to feel more energized to follow the plan and stick to it. Moreover, it is going to be a lot easier for you to track your progress.

Making Smart Investments

Savings by themselves don’t take anyone too far. However, savings, when invested wisely, can do wonders.

1. Consult a Financial Advisor

Investment doesn’t come naturally to most of us, so it’s wise to consult a financial advisor.

Talk to him/her about your financial goals and savings, and then seek advice for the best investment instruments to achieve your goals.

2. Choose Your Investment Instrument Wisely

Though your financial advisor will suggest the best investment instruments, it doesn’t hurt to know a bit about the common ones, like a savings account, Roth IRA, and others.

Just like “no one is born a criminal,” no investment instrument is bad or good. It is the application of that instrument that makes all the difference[2].

As a general rule, for all your short-term financial goals, choose an investment instrument that has debt nature, for example fixed deposits, debt mutual funds, etc. The reason for going for debt instruments is that chances of capital loss is less compared to equity instruments.

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3. Compounding Is the Eighth Wonder

Einstein once remarked about compounding:

“Compound interest is the eighth wonder of the world. He who understands it, earns it… He who doesn’t… Pays it.”

Use compound interest when setting financial goals

    Make friends with this wonder kid. The sooner you become friends with it, the quicker you will reach closer to your financial goals.

    Start saving early so that time is on your side to help you bear the fruits of compounding.

    4. Measure, Measure, Measure

    All of us do good when it comes to earning more per month but fail miserably when it comes to measuring the investments and taking stock of how our investments are doing.

    If we don’t measure progress at the right times, we are shooting in the dark. We won’t know if our saving rate is appropriate or not, whether the financial advisor is doing a decent job, or whether we are moving closer to our target.

    Measure everything. If you can’t measure it all yourself, ask your financial advisor to do it for you. But do it!

    The Bottom Line

    Managing your extra money to achieve your short and long-term financial goals

    and live a debt-free life is doable for anyone who is willing to put in the time and effort. Use the tips above to get you started on your path to setting financial goals.

    More Tips on Financial Goals

    Featured photo credit: Micheile Henderson via unsplash.com

    Reference

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