Personal finances can be a tricky subject. For AU students taking on student loans, juggling multiple jobs, and supporting dependents, money can be a topic that induces anxiety and stress. Moreover, with the global financial downturn and pandemic predicament, many have struggled to make ends meet in the past few months. As a student I have found that there are various challenges that have arisen during COVID that have made financial literacy more important than ever in helping shed light on discretionary spending. I still remember the day that my employer informed me that there would be no summer student role available as promised prior to February 2020. I was appalled by this sudden change in my income, one that could make it ever more challenging to pay off my student loans.
Over the summer, I’ve consulted various professionals to better understand my financial situation. The insights I’ve gained from this ordeal was impressive. However, the challenging part was putting these tips into practice. Here’s what I learned:
- Create a budget: While this is a common rule of thumb for managing our expenses, it is incredibly challenging to commit to doing this on a weekly basis. For myself, I’ve begun using an Excel spreadsheet to track my monthly spending. The first step to improving personal finance management is understanding our strengths and weaknesses. Without the key metrics and data to inform us, it would be challenging to identify the category we spend the most in or when we may have lapses in judgment. For example, I’d learned that by mid-week, my spending tends to spike due to accumulated stress from the week. Understanding this problem, I’ve learned better methods to destress than, for example, online shopping. During the pandemic it can be easy to overspend on streaming services or online shopping, therefore carefully tracking these numbers can be valuable to changing our behavior later on.
- Have an emergency fund: this is a critical step in covering for unexpected expenses. For example, since adopting my dog, I have visited the vet at times when I had least expected it. Having a “rainy day fund” helps plan for these miscellaneous expenses that sometimes have a large impact on your overall budget.
- Get a second opinion: It never hurts to have a second set of eyes looking at your finances. However, it is important that these are knowledgeable professionals rather than a friend or family member. Specifically, I’ve consulted financial planners with qualified designations that can help provide valuable insight into your long-term financial goals.
- 80% action, 20% knowledge: While many of us may be familiar with personal finance tips, it is infinitely harder to act on this knowledge. For example, while I’ve been aware of budgeting for a long time, it has never occurred to me to actively review my budget and personal goals to get the most out of my savings. Sitting on knowledge isn’t valuable unless action can be taken to benefit our long-term goals.