- Nabilah from ELEVEN
A Dummy’s Guide to Saving Money: University Student Edition
I’m going to be honest with you - I’m not exactly the most financially savvy person out there. I’m ashamed to admit this, but my friends would probably describe me as the worst person when it comes to managing my personal finances. But with only a little more than a year left as a student, and this global pandemic destabilizing economies and job markets all around the world, I think it’s about time I take my personal finances more seriously. If you feel the same way as I do, join me in my attempt to be more financially responsible.
Disclaimer: This is for the average university student who struggles to manage their finances, not the one who’s ready to invest in savings plans (I wish I was in that stage already).
Step 1: Find out where you’re at right now
Firstly, before I even work towards my financial goals, I think it’s important to know my past earnings and expenses to see where I currently stand. To do this, I use my POSB Digibank mobile app under the ‘Plan’ panel to view my average in and out transactions for the past 6 months. Being aware of my cash inflow allows me to set realistic expectations when deciding how much I am capable of saving each month. The app also gives me a breakdown of my monthly spendings into categories such as transportation, dining, shopping, cash, transfer, and so on. Something like this!
Source: DBS Bank
This one’s from the DBS Digibank mobile app, but the two apps have very similar features and interface! This breakdown gives me a clearer idea of my spending habits and which areas of my lifestyle I could possibly make changes to so that I can boost my saving capacity to reach my financial goals. Everyone has different goals, and it’s really important to think of these things to encourage you on this journey and to guide you on how to plan for it. Some good questions to ask yourself would be: What am I saving for? How much do I need? Why is it important? What will happen if I don’t save X amount of money? You can even think in terms of broader goals and where you want to be in X years from now. This really helps you to stay on track as you work towards your saving goals because you know what’s at stake/what you’ll miss out on if you don’t accomplish it!
Step 2: Set a budget (and track your expenses)
Setting up a budget plan is pretty much what I had to come up with in order to limit the chance of overspending. I honestly don’t like the idea of setting budgets because it feels restricting, but I soon realised that a shift in mindset was needed if I really wanted to manage my finances better. Personally, the thought of budgeting as a tool to help me ensure I spend money in areas where I want to really helped me manage my spendings. There’s the 50/30/20 rule you apply to your monthly income which a lot of people swear by - 50% is spent on needs, 30% on wants, and 20% is kept as savings - which I feel is a good starting point. Alternatively, if you set yourself specific goals based on a personalised time-frame, you can be more flexible and adjust these proportions accordingly, which is what I currently do! For example, if I’m saving for a trip that’s coming up really, really, soon, I might have to skimp on my wants to save a little more, but if I’m saving way in advance for a long-term plan such as purchasing a house, I would be more lenient on myself to continue saving sustainably. So according to your plan, you can reduce your expenses in the areas for improvement you have identified previously! It’s really important here to reevaluate and clearly distinguish your needs versus your wants.
But everyone knows that budgeting only works if you actually stick to it. I’ve tried using the cash envelope method where at the beginning of each month (or when you get your income) you withdraw cash from the ATM and dedicate a fixed amount of money to each planned category. The idea is that you can only spend that exact amount in each envelope for that specific category, and if it runs out - well you can’t spend on anything else. However, I find that as everything becomes increasingly cashless, especially with the rise of online shopping and the constant need to PayNow/PayLah friends for a split dinner bill, this isn’t a very viable option. This is why budgeting has come hand-in-hand with tracking my expenses.
By tracking your expenses, you get to keep a detailed record of your spendings which allows you to be more mindful of your budget. The first time I did this, I realised how my little Shopee purchases really added up quickly. There’s a couple of ways to go about tracking your expenses - some people prefer filling up Excel sheets, but I personally dedicate a section in my journal to keep track. As these methods can be time-consuming, some may prefer the convenience of mobile apps like Seedly and Spendee, where you can link your cards directly to the app so that your purchases are automatically recorded. In fact, instead of third-party apps, you can just make use of your bank’s digital app, like I have previously mentioned - POSB Digibank and OCBC Mobile Banking both have a money tracker function. The automated categories obtained from your card spendings may not be accurate, but you also have the option to manually input your expenses as well.
Another tip: Set up automatic withdrawals! This means that the bank automatically sets aside a fixed amount every month for you to keep as savings so you resist the temptation to overspend. This can usually be done on the mobile apps itself (I promise this article is not sponsored).
Step 3: Consider additional sources of income
In order to boost my savings, I can’t just think of mere strategies to help cut back on spending or to just come up with a lifestyle change, I should also consider how to generate extra income. Some of us probably already have part-time jobs, but for those who are wondering where else to earn the extra cash, try looking for jobs on campus. The rates are actually comparable to the average retail and F&B jobs out there and the best part is - you save the time and energy that would be spent on commuting! NTU students can visit the Work-Study Scheme on the StudentLink to check out the list of available job positions - there are usually jobs like library assistants and event assistants to research assistants (which usually pays more). If you have some downtime between classes like I do (because I get defeated by STARS every semester), fill it up by participating in paid research studies in school. I always remember to check out my school email inbox or notice boards around campus for calls for research participants. Even if it’s just $6 for a 30-minute lab survey, that’s still my lunch money for the day sorted.
So this is it. My attempt as someone with no discipline in managing my finances to develop healthier spending habits in order to reach my goal of being financially prepared for unemployment post-graduation. I’m kidding. Maybe not, time will tell. But I’ve learnt that it’s really important to pay attention to the small details in order to prevent yourself from recklessly spending and to always live within your means.