During my time as a college student, I’ve come to learn more about my finances through the reality of having to manage my money. When you have the expense of books, food, maintaining a car and what’s needed for basic living and entertainment, you have to become smart about how you spend what you have. I have adopted the principle of living below my means, rather than just within them which has worked well with helping me achieve my personal goals. Here are things that have worked to help me stick with this strategy.
The biggest thing I’ve done in order to live below my means is to develop a budget. An essential part of budgeting is to focus on reducing your spending to fit your income. As a college student, I do not have much of an income, so it is important to track my spending and allocate my money accordingly. One thing that I have learned to do is to track my spending each month so I can have a clear picture of how much I am spending on groceries, activities, and non-necessities.
Budgeting monthly allows me to see how much I am spending on meaningless expenses. Small purchases here and there can add up quickly without even realizing it. Like buying a daily coffee or purchasing lunch every day, and they can also cause you to go over your budget without knowing it. I try to eliminate these small purchases by setting spending amounts on groceries, eating out, and coffee. It’s not easy, but developing these habits helps me free up money for truly important things, and ultimately live below my means. Saving on all the little things means that I am able to put my money towards something important in the future. Reevaluating financial habits and realizing your priorities is essential. The more you make the habits of examining your spending and making a monthly budget apart of your life, the easier it will be to manage your money and live below your means.
To live below my means, I also think about how to make my money stretch, like valuing experiences over expensive purchases. Instead of going out for an expensive dinner with friends, making a home-cooked meal together will alleviate financial stress, and the money saved from cooking at home can be put towards something more important in the future. Experiences that cost less money are often a more significant source of happiness than spending a lot of money on something.
I’m a complete advocate for living below your means and still being able to be happy. It’s worked for me and quite possibly could be the thing you need at this stage in your financial journey to support future goals. Living below your means is essential to afford things that are valuable to you instead of what is just in front of you. Every time I think about a small purchase that I genuinely do not need, I think about all the things that I could use that money on that are of true value to me. The most beneficial part of living below your means is that it allows you to save money for more important things than just random impulse buys. Just think about the kind of things you want for your future and it might help put things in perspective. My key takeaway, the key to living below your means is to simplify your financial spending. I hope this helps. If you have questions on how to budget or would appreciate a financial plan, stop into InvestEd for a free chat.