Six money tips that a student cannot afford to miss

Smitha HariFinancial responsibility is a critical, yet most neglected aspect of student life. Personal finance and financial planning is usually associated only when one starts earning. Nevertheless, even as a student, there is a lot which can be done in this respect. Here are some money tips which can help a student:1. Prepare a budget and stick to it: As a student, the primary source of cash inflow is the pocket money given by parents. In majority of cases, this is limited and not free flowing. Therefore, it is advisable to prepare a monthly or weekly budget for the expenses likely to be incurred. One should include the recurring, common expenses which need to be met. It is also advisable to keep some amount towards sundry expenses, as many students tend to overshoot the budget. Preparing a budget is not enough; sticking to it and not over spending is equally important. Shopping with a list, using cash or debit cards and controlling oneself from impulsive purchases can help in staying within budgets.2. Explore smart ideas to curtail expenses: It is very easy to spend money. The difficult task is to spend smartly. There are various ways to cut back expenses. Make use of student discounts which are available in different cases. Explore if it is possible to share the cost of books or other resources with friends. In some cases, there is an option to exchange belongings and use them through online portals.

Opting for house parties or inexpensive outings are other ways to reduce expenses.3. Set aside a small amount for financial emergencies: An emergency is not restricted to a huge medical expense or an exorbitant financial commitment. For a student, a financial emergency can be as simple as need of money to purchase a book or paying a bill. It may not be wise to turn to the help of parents for small financial emergencies. It is therefore recommended to save a small proportion of pocket money on a monthly basis and save for the rainy day.4. Invest any excess in equity: The general rule in financial planning is to save first and spend later. This may not always be possible, especially for a student. Nevertheless, as a student one must always endeavour to save as much as possible, and invest whatever has been saved. It is suggested to invest in equity instruments in the form of a systematic investment plan (SIP) in mutual funds. By following a discipline to invest on a monthly basis (albeit a small amount), one can expect this to grow to a large corpus due to the compounding effect.5. Avoid using credit cards: Nowadays, banks and credit card companies have started offering credit cards for students. This is usually in the form of an add-on card to the parent’s credit card. Although a credit card has many benefits, a student can be financially on a safer foot if he uses payment or debit cards instead of credit cards. This is because it is very easy to spend excessively using credit cards and get into a credit crunch if the dues are not paid on time. This can cause havoc in the student’s finances if not used with care.6. Explore how to earn extra income: In today’s digital world, it has become very easy for students to explore options to earn an extra cash flow, in addition to the pocket money they get from their parents.Online freelancing jobs or other part time jobs which can be done during weekends can help in supplementing the cash inflow, thus leaving more in the hands of the student. However, it is advisable not to be reckless with this extra income, and to instead look at ways of spending wisely or investing productively.Receiving pocket money or earning an additional income is not a license to splurge or act irresponsibly. Conversely, it is an opportunity to become financially disciplined and the first step to lead a more rewarding financial life.The author writes on personal finance and financial planning. She is associated with www.gettingyourich.com, a Mumbai based financial planning firm.