By Edward Mugambi
Financial wellness means learning how to effectively manage financial spending. Financial pressure has long been considered a common cause of stress, worry, and anxiety among college students. Being financially responsible and independent, keeping track of expenses, planning a budget and sticking to it are key skills.
What is financial wellness?
Financial wellness can be described as a state in which a person is able to fully meet current and ongoing financial needs, feels secure about their financial future, and is able to make decisions that make life enjoyable.
How important is financial wellness?
Finances are a source of stress and anxiety for students. Finances are important because they give us the information and skills we need to manage our money effectively. With such a busy schedule and so much to manage, you’ll be less stressed if you find a few ways to improve your financial wellness each week. Developing a solid financial plan is a big step in achieving your goals.
The path to financial wellness
Don’t worry, you’re not the only one with money management issues. Student debt could pose an immediate threat, especially as expenses increase for higher education, housing, bills, food, caring for other dependents, and other basic expenses. Meeting these financial obligations can easily be daunting, but avoiding them only increases tension, anxiety and fear. There are many opportunities on and off campus, as well as seminars and programs that can guide you to successful money management. Here are some financial wellness tips:
- A budget is better than no budget at all
Does budgeting seem boring to you? By budgeting your income and expenses each month, you’ll have a clearer idea of where your money is going. This will help you avoid the awkward situation at the end of the month when you actually want to go out with your friends, but you’ve spent all your money.
- A penny saved is a penny earned
Reducing spending is an important issue when it comes to financial literacy. Take advantage of free events and student discounts while you’re in college. The less you spend, the more money you’ll have later.
- Activate your emergency fund
Anything can happen to you. Getting funding for unexpected expenses will reduce stress and improve your finances. Since this is money you want to get quickly, it needs to be different from your long-term investments. Just like learning, you need to save smarter, not harder.
- Don’t borrow more money than you expect to earn.
Keep track of your total debt while you are in school. If your debt level is less than your expected annual income, you should be fine. This should keep your payments below 15% of your potential income.
- Pay yourself first
After you graduate and start your career, pay yourself first. Just as you pay your bills each month, set aside a percentage of your salary in a long-term savings plan or other fund. According to experts, 20% of each paycheck goes into long-term savings.
Everyone’s financial situation is different, so you need to find the right mix of resources that best suits your needs.