5 Steps to Managing Your Finances as a Student

On reading the title, your first thought may be, “How do I manage the little pocket money that is never enough?” Or, you’re wondering if that pocket money is even part of your finances. These questions, and more, plague many students who find it difficult to make ends meet in the university.

Fortunately, managing your monthly allowance, side hustle profits, scholarship funds, and other income sources is not a herculean task. In time, it could even become an incurable habit. That’s why we’ve compiled five easy steps you can follow to gain financial freedom as a student.

Avoid Lifestyle Inflation

Lifestyle inflation simply means spending above your means or making unnecessary expenditures. Perhaps, your monthly allowance has increased, or you desire the lifestyle of your peers and social media influencers, it's worth noting that lifestyle inflation is the leading cause of students going broke earlier than they should.

Let’s talk about Ade, a 400-level student and the President-elect of Biomedical Engineering. From his first day in school and up to his election, Ade was satisfied with the menu offered in the Mavis Restaurant at Red Bricks, Jaja Complex. After his election, however, Ade decided that Mavis no longer befits his status as the department president.

In more ways than one, we are like Ade. We often mount pressure and incur unnecessary expenses on ourselves. Or, we could be like Amaka, a 100-level student with a monthly allowance of N20,000. She’s a fun-lover that detests being left out of any turn-up, so she joins her roommates for a party where the entry ticket costs N10,000. Dey Play

Don’t get me wrong, you are absolutely right to desire the best quality and a high standard of living. Having fun and enjoying your stay in school is not a crime. However, there’s something vital you’re missing if you want to maintain this lifestyle. You need a budget.

Be on a Budget

Budgeting seems obvious and simple enough to perform. Yet, many students fail to enjoy its benefits. That’s because they don’t track their income and expenses after allocating their funds.

Have you ever been in a situation where you can’t explain how your money is finished? I’m sure you’ve experienced that “sapa” season when the semester is drawing to a close. If you want to flex when your friends are deep in the clutches of sapa or owu, ask yourself these questions:

• What is my monthly income?

• How much do I spend daily/weekly?

• How much do I save? 

• Where does a majority of my money go and how can I minimise this? 

Here’s a handy tip: open a Kippa account and take note of all you spend and receive. This account should be your bookkeeper. 

At the end of the semester, you want to hang out with friends, roommates, and coursemates after the gbas gbos exams. Who do you want to be? That person who always says "I am broke, I don't have money"? Or, do you want to be the person who says " Okay, I can afford to hang out with my friends, since I have saved up all semester for it". So what is the secret to this?

Create A Savings Plan

We have discussed budgeting–tracking your income and expenses. What about your savings? You need a security blanket for those out-of-the-blue payments or rainy days that need to be sorted. 

Your savings plan must be realistic, honest, and personal. This is what a financial-savvy person would do:

• Decide on a financial goal: Financial goals make you focused and strict with your money. It is one important money habit you should have. You need to decide the purpose of your savings and how long you intend to save. 

• Create an automated savings account: Cowrywise and Piggyvest  are the most popular and student-friendly saving accounts. They periodically withdraw a fixed amount from your regular bank account. This way, you wouldn’t be tempted to skimp on your savings.

• Do without a debit card:  We are in the cashless era, but an expensive era as well. You tend to spend more with your ATM card and save better with cash. This is because you have control over what you hold and see. A handy tip would be to withdraw all the money needed for a day/week, and spend from it. Trust me, you would save better.

Saving is good but there is more you can do with it.

Invest Your Excess Income

As a student, an investment may sound bizarre, but it’s simply making your money work for you rather than you working for it. With so many investment options out there, its easy to run into scams and get-rich-quick ventures. However, you must be able to spot Ponzi schemes and avoid investing in them. After all, good investments take time and consistency.

Just like the saying, the best time to invest was yesterday, and the next time to invest is today. Sign up for an investment platform like Risevest and learn about good investments for beginners. This way, you can properly understand your risk appetite and avoid making mistakes.

Making the Most of Your Finances

Managing your finances as a student is about making deliberate choices. Lifestyle inflation, as seen in Ade and Amaka's stories, can derail financial stability. However, with a budget, you gain control over your income. These steps aren't mere suggestions; they're tools for financial freedom. So, as you embark on your financial journey, make the most of these insights to pave the way for a secure and empowered future.