Becoming financially independent for the first time can be an exciting but overwhelming time. Whether you’ve received your first pay cheque or student loan instalment, it can be tempting to spend it all at once. But in reality, you’ll need to dedicate a significant portion of your income to rent, food and bills.
After the essential costs have been paid, it’s important to devise a plan of how to utilise any spare money. Instead of impulse spending, you’ll thank yourself later for learning how to balance saving for your future with buying the occasional treat.
Being aware of your fundamental expenses is the first way to take control of your finances. This will help you avoid spending beyond your means and reach long-term goals.
To begin your financial plan, assess your monthly income. This is especially vital if you work freelance or rely on tips. If you earn more than expected or have a slow month, it could affect your budget for the following month.
Use a notebook, online spreadsheet or budgeting app to make a note of your monthly financial obligations and subtract this amount from your income.
This can include rent, bills, student loan payments and insurance premiums.
After factoring these vital payments into your budget, your next priority might be fixed-cost automated payments such as a Netflix subscription or gym membership.
When you begin the next month’s budget, consider what worked and what didn’t. You might decide to make adjustments as time goes on if your financial priorities change.
Be aware of how much your utility bills cost, and keep track of any changes. This can be tricky if someone else is responsible for organising these payments. But being oblivious to the exact amount could result in overspending and not having enough to cover the cost.
It may also be beneficial to create a joint account so that everyone can easily check outgoings. But only do this with people who are financially secure and can be trusted to pay on time.
If all payments come out of one person’s bank account, it can be difficult for everyone to keep track of the costs. If anybody doesn’t transfer their share of the bills on time, the responsibility falls onto the account holder.
How much should you save?
If you have any money left over, envisage your saving goals and work them into your budget.
Saving while you’re young will make things much easier when you’re ready to buy a house, get married or are in desperate need of a holiday.
Saving is important, but if it forces you to abandon your social life, hobbies or love for new things, you’ll most likely feel deprived. This can result in reckless, unplanned and impulsive spending.
Saving less so that you can afford the occasional treat could actually lead to more money being saved in the long run.
Treating yourself to the occasional swanky dinner or new outfit may seem harmless, but try not to get carried away and always stick to the allocated amount in your budget.
Online platforms such as Instagram and YouTube are brimming with sponsored and aspirational content which constantly encourages people to spend.
Despite what you see on Instagram, most people can’t afford to live the life of luxury. But no matter what other people are buying, it’s crucial that you don’t get swayed to spend irresponsibly. By creating a money management plan, you will find financial stability and prevent making messy mistakes that could land you in tremendous debt.
The move from first to second year at university often comes with a lot of change as most students will have to start paying bills for the first time. In this feature we discuss how you can keep your finances organised and pay bills responsibly.
The move from first to second year at university often comes with a lot of change as most students will have to start paying bills for the first time. In this feature we discuss how you can keep your finances organised and pay bills responsibly.
The move from first to second year at university often comes with a lot of change as most students will have to start paying bills for the first time. In this feature we discuss how you can keep your finances organised and pay bills responsibly.
