Among all the demographics, students are considered the most cash-stripped of all. Making ends meet seems almost impossible with the student debt, housing costs, and lack of time to get a job. In fact, most of the modern generation’s money problems come from the lack of basic financial literacy.
People often can’t seem to differentiate between essential spendings and wasting money. For students, for example, ordering custom essay writing might be essential, especially with a deadline looming and other projects waiting in line. But is buying a coffee every morning equally essential?
In this article, we will help you see the difference and give you some tips on how to stop flushing your money down the drain.
Understand What Triggers Spending
We live in a society that is built upon consuming, buying, having money, and spending it. The youth often chase fashion designs and trends just to look a certain way. All because social media convinces us it’s the proper way to live. We constantly compare ourselves with these unattainable standards, which keeps us wanting to buy and spend even more.
We follow online influencers, brands, and accounts that promote things and continuously impose ideas onto us. And it can be extremely hard to understand if you really need something or it’s just the fact that you’ve seen an ad one too many times. Now that people are stuck at home most of the time, online shopping has become synonymous with leisure.
But the fact is, it’s just stuff. Buying the latest designer collections won’t make you happier for long. Sure, you will feel a rush once the item arrives in the mail but what’s the point if you can’t even wear it out?
Don’t Try to Fill the Void
Shopping to feel better also falls into this category of unnecessary spendings. Yes, you might feel better for a second there, but surrounding yourself with clutter won’t make a state that you’re in go away permanently. In fact, buying stuff can make you feel even worse in the long run. You might look again at all the impulse purchases you’ve made and feel the guilt kick in.
If you’re depressed, take that money that you were going to spend on clothes, furniture, or food and take it to a therapist. That will make an actual investment into your mental health and a happier future.
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Track Your Budget
Many people make the mistake of not tracking their income and spending. Doing this is the first step to raising your financial literacy. If you don’t, you will never really own your money, quite the opposite actually.
Using Excel, notes on your phone, or just a basic pen and a piece of paper, write down your income. If it fluctuates, take an average from the last six months, or the lowest it has been in that period. Then, write down everything you spend your money on. Save receipts or check your bank account stats for that. Divide your spendings into categories:
- Fixed. This includes the things you will have to spend money on, no matter the circumstances. Your rent or mortgage, utility bills, insurance, services (haircuts, childcare, etc.), and debt.
- Flexible. Groceries, phone and internet bills, car repairs or transportation, etc.
- Optional. Take-out, entertainment, subscriptions, gym memberships, etc.
This list may vary tremendously depending on your lifestyle and spending habits. This is just an approximate template.
Try to automate as many of these spendings as you can. Things like taxes, savings, and some bills can be charged from your account automatically. This way, you will not even see that money, hence, will not count on it.
Analyzing your spending habits, breaking down and writing down all your spendings, and having them right in front of you can be eye-opening. You will see what you spend more money on than you thought and what might not be getting enough attention. Think about takeout, taxi charges, buying at Starbucks, online entertainment, etc. Reassess all your spendings. Let’s look at this in more detail.
Do You Need to Eat Out Every Night?
Counting how much you spend on takeout or eating out can be shocking. That’s why learning to cook and eating in is one of the best things you can do for your budget. Not only that, but it’s also a self-care exercise. What can be better than making a delicious and nutritious meal for yourself?
The same goes for coffee. According to a study by Amerisleep, millennials spend about $2,000 on coffee every year. That’s a lot, don’t you think? The best way to cut down on that number is to stop buying coffee out. Making a cup at home before work or classes will save you a ton of money.
Discounts are a strategy meant to make us buy more. When people see the discount, their instinct is to look at the original price. And when they see a 60% difference, they are tempted to buy the item, regardless if they need it or not.
But in fact, the original price might not reflect the quality of the product at all. It might even have been increased specifically to make the discount seem more impressive. This is a trap that all retailers use to lure you into buying stuff. Making a list will help you avoid that.
The same applies to grocery shopping. Never go to a grocery store hungry and/or without a list. Making a menu for the week is a great idea, too. This way, you’ll be able to cook different things with the same ingredients. This, in turn, will help you buy more versatile ingredients and avoid food waste. When you’re at the register, take a look at your cart once again and think twice if you actually need all that.
Reaching financial health is a very important step to becoming an adult. Unfortunately, many people waste their money on unnecessary things long after they hit the age that is generally considered ‘old enough.’ Look into your spending habits, break down your budget, and cut down on unnecessary spendings.