The first step to gaining better control of your spending is knowing where your money goes. Understanding your spending habits involves more than proudly reminding yourself that you have covered the necessities such as food and fuel this week.
What about the quick stop for chips and soda at the convenience store? The four visits to the neighborhood coffee shop? Assessing what you spend means really scrutinizing where each dollar goes–then determining where you can reduce expenditures so that your funds from work, parents or a student loan will last longer.
Small, seemingly inexpensive purchases are a major financial pitfall for many college students. Spending $6, after all, does not usually have immediate consequences, and is such an insignificant dollar amount that most students do not think twice before spending it. But what if that $6 is spent on a specialty cup of coffee, and what if that innocent cup of coffee is purchased six days a week? It is easy to see how small purchases can quickly add up, leaving students broke, hungry and wondering, where did all my money go?
By tracking all of your expenditures over a two week or one month period, you will get a clearer picture of where your money is going. The idea is to understand your spending habits such that you can become more conscientious about how you apportion your money, not to eliminate everything that is not a necessity. Perhaps your daily cup of coffee is a meaningful and relaxing part of your day. Even the savings from buying a smaller size can add up, or why not invest in a coffee maker and brew coffee at home for long term reduction in spending?
One activity many students find consumes a disproportionate amount of money is patronizing convenience stores. Frequent stops for snacks and drinks at convenience stores and drug stores can add up fast, especially considering the higher than average prices charged at such places for the convenience. When assessing your spending habits at convenience stores, ask yourself, “what am I buying?” If you frequently stop for a soda, it may make better financial sense to purchase it in bulk at a regular grocery store. While you may spend $1 at a convenience store for one drink, you may find that you can get a twelve pack for around $4 and stretch your dollar further.
Another major money trap for college students is eating out for every meal. The opportunity to socialize and again, convenience, drive many students to go to restaurants for breakfast, lunch and dinner, a habit that can quickly drain funds.
If restaurants account for an overwhelming percentage of your expenditures, look for ways to reduce the percentage without depriving yourself of food or socializing. For instance, if dinner out with friends is on the agenda, you can simply eat breakfast and lunch at home to justify the greater expense of dinner. Planning for meals is key–if you do not have groceries on hand to create your own meals, you will likely end up opting for fast food and putting yourself in the same, financially strained situation time and time again.
Learning to spend wisely and in moderation may take some time and ongoing effort, especially with the instant gratification to which many of today’s college students have become accustomed. Taking an honest look at your spending habits is the first step to establishing a balance between responsibility and indulgence that will not leave you starving next week.
About the Author
Edmund Rogers, a graduate student in English, is the editor for iStudentLoan.com, a student loan and student loan consolidation provider which also supplies a free online resource for learning about and applying for a student loan.
Image Credit: TheHappyHomeOwner.net
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