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Why students should create their own financial plan

Stepping out of the sheltered environment of a school and a comfortable life at home under the guidance and support of parents marks a major turning point for every student stepping into a university. Just like every other phase of life, it is not the academic and theoretical knowledge alone that we gather but also incur several practical real-life experiences during the course of time and thus, have our respective take-away lessons from them. Becoming financially independent in terms of handling your own expenses and allocating a suitable budget for yourself, is one thing which comes across as both a responsibility as well as a feeling of growing up as an adult.

Why create a financial plan

It is imperative to create your own financial plan as a student at the very beginning itself. Systematised financial planning will not only assist you to manage your expenses well but will go a long way in letting you strike the right balance in your new independent life. Although it may seem like a petty issue, planning an appropriate budget is certainly a necessity for every student to facilitate wise decision-making. Particularly for those going abroad for higher studies, this is a matter of concern as almost all universities include an estimated financial plan structure vis-à-vis the available resources as a mandate to be submitted by every such student before the admission.

How to create a financial plan

So now that we know why financial planning is crucial for a student, let’s take a look at the important points to consider while creating your financial plan:

  • Allocate a priority-wise budget – While creating a suitable budget in accordance with the available financial resources is a must, it is even more critical to ensure that the budget you set matches correctly with your set of priorities. For instance, your budget allocation for basics such as books and food ought to precede the expense amount for luxuries such as eating out or vacationing with friends.
  • Monthly Categorisation – Again, this is an extension of prioritisation of your expenses, wherein you as a student should categorise your expenses into varied buckets such as essential, non-essential, immediate or eventual and those which can be reduced by pooling in together with friends. This kind of strategic assessment and pre-planning of expenses can also help to keep the budget stable and refrain from getting oneself into any difficult situation.
  • Limit your Credit – Though credit cards and other credit options are a great saviour in today’s era and more so for students, but they are also spoilers and often lure one into getting under unnecessary expense and then, debt. It is vital to set a monthly credit limit for yourself and yet, try to have minimal opportunities for relying on it. Rather, one must curtail some of the miscellaneous expenses to limit the credit, if need be.
  • Pre-deciding a swapping game – Swapping game, as the name itself suggests, would mean swapping some of your requirements of a particular month with others as per your changing circumstances. Your budget must have such discretions, wherein you make space for certain unexpected changes and then, you are able to accordingly swap those requirements, making them fast-forward in return for giving in some of the current things at a later stage.
  • Awareness to make the right banking choices – At present times, where one is overwhelmed with the numerous banking services available from many different banks, it is critical to have complete knowledge about the relevant solutions and what works best in your situation and then, make a sound decision. Moreover, along with the alluring solutions come a lot of terms and conditions, which must be understood well in advance and considered wisely while making your choices.
  • Create a wish list – Last but not the least, create a secret wish list of things you would like to buy for yourself but are unable to accomplish at the moment due to limited finances. This list will not only motivate you to stick to your budget but will also serve as a constant reminder of the prize which you will fetch by going the saving route.

Interestingly, some universities such as the University School of Business, Kajrat, which offer special finance advisory provisions for their students to sail through the unsteady waters of budgeting. The university, being a world-class business school, is an established global platform for students coming from world over and thus, it makes sure to provide the necessary financial guidance and support for budgeting through varied channels. Such unique finance practices of this prominent B-school makes it a perfect example of institutions doing their bit in assisting students to become aware of their financial choices and set their priorities right.

The author is Tarun Anand, founder, Universal Business School.

Also Read:Financial education is imperative to build an economically stronger India

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