Navigating finance as students or recent graduates can be daunting. The lack of clarity and/or not knowing where to begin is what causes the uncertainty. This article will shed light on 5 strategies for easing the personal finance journey for students and recent graduates.
Embark on a financial literacy journey
We’ve all heard the saying; “Knowledge is power.” What that essentially means is that we do better when we know better. Hence, the best personal finance decision students and recent graduates can make is educating themselves on finances.
Many wonder where they should start, fortunately we live in a digitized world and most, if not all, resources are right at our finger tips. Afterbreak magazine has a few articles based on finances such as this one so this would be a great place to start. YouTube and Google have a plethora of finance related content that you can browse. I must say I’ve come across numerous books based on finances and I greatly enjoyed some myself. So do yourself a favour and equip yourself with great financial advice by embarking on one of the most rewarding journeys.
Set financial goals
After you’ve embarked on a financial literacy journey and equipped yourself with finance based knowledge you often wonder how you will implement what you have learned. That’s where setting financial goals comes in. However, you may wonder what financial goals are. Well, financial goals refer to the objectives or targets that individuals or businesses set for their financial future.
Setting financial goals is important because it is an effective way to provide a sense of direction and purpose, and keep you on track to achieve financial success this is especially crucial in your young adult years. Establishing financial goals can also motivate and inspire you, as it provides measurable steps for striving.
When setting financial goals ensure that they are realistic. Here are the three ways to ensure that your financial goals are realistic. Firstly they have to be Achievable, Use your income (and expected income) to set your goals for the future. Don’t count on winning the lottery to achieve what you want, or on money that you’ve either not received yet, or if there’s uncertainty attached to receiving said money.
Secondly, your goals need to be specific you can’t state “To get richer” as a goal because it is not a specific or clear goal. However, “Save N$100 every month” is.
Lastly, your goals must be measurable. You can ensure that your goals are measurable by setting a deadline for your goal. Such as the age at which you want to retire, or the timeline for buying a new house or, because you are still a young adult, just simply striving to save N$1200 by the end of the year.
Create a budget
Budgeting is an essential part of personal finances. Emphasis on ‘personal’ because a budget is specifically catered to your individual needs. Budgeting by definition is the process of creating a plan to spend your money. Budgeting allows you to determine, in advance, whether you will have enough money to do the things you need to do or would like to do. it is simply balancing your expenses with your income. In a nutshell a budget keeps your spending in check and makes sure that your savings are on track for the future. Moreover, budgeting can help you set long-term financial goals, keep you from overspending, help shut down risky spending habits, and more! There are numerous ways to budget hence you should find one form of budgeting that is specifically catered to your needs
Start saving
Savings refers to the money that a person has left over after they subtract their consumer spending from their disposable income over a given time period. Savings, therefore, represents a net surplus of funds for an individual or household after all expenses and obligations have been paid. However, as a young adult that wants to save money you should allocate a specific amount or a percentage from their income towards their savings.
Saving money is one of the most important financial habits you can adopt. It can help you to become financially secure and act as a financial safety net for you and your loved ones in case of an emergency. If you are just starting out saving towards something can help you get into the habit. Ensure that like all financial goals, your goal of saving money is realistic, specific and attainable.
Live within your means
With the growing surge of ‘luxury life’ or ‘soft life’ and the pressure to live the lives we see portrayed on social media, it’s very important as a young adult starting out to live within your means. What does it mean to live within your means? It means not spending more than you earn.
There are numerous benefits to living within your means. Such as, having enough money to cover all your expenses. Living within your means helps you have freedom to make choices with your excess income. It also helps you save more with the surplus funds.
Pro tip; Having a budget helps you live within your means.
This article was aimed to help you strive towards educating yourself on finances by actively embarking on a financial literacy journey. And encourage you to actively work on creating financial goals and how to go about doing so. Understanding the importance of a budget which will evidently help you work on living within your means and hopefully having a savings fund.
