The best time to learn how to master budgeting is when you’re still a student with a limited income. If you can fight off the temptations of overspending when hanging out with your friends, it will be easier for you to handle your personal finances when you get a full-time job.
Still, it’s common for students to make mistakes when handling their money. After all, budgeting is something rarely talked about, and in my experience, it’s something you have to make an effort to learn more about by scouring the internet and asking your parents. So, let’s go into these mistakes and learn from them!
1. Saving too much
Yes, there is such a thing as saving too much. Saving too much means you try to spend as little as possible by cutting out your hobbies and the things you do for fun. It may also mean that you settle for eating economic rice every day.
This sounds counterintuitive, but this budget is actually infeasible. After all, the end goal of a budget isn’t about saving money; it’s about living the life you want to live. A proper budget should take into account every aspect of your life and seek to enrich it. Thus, we have to consider what experiences we value and set aside money for them as well.
For example, as a foodie, I set aside an amount of money every month for when I go out with my friends to nice cafés. I also budget a set amount of money to spend on games and books. Having a budget definitely takes away the guilt and anxiety of spending money.
2. Being influenced by your friends’ spending habits
We usually end up making friends with like-minded individuals. This is great as we can do the things we like with other people who enjoy them too. However, it’s a double-edged sword when you may be tempted to overspend due to peer pressure or FOMO (the fear of missing out).
To give an example, I have a group of friends with whom I play multiplayer games, and it’s common for us to suggest buying games we can play together. Thankfully, we don’t exceed our budget as these games tend to be cheap. However, if you and your friends tend to spend money on more expensive things, it may be harder to say no because you may end up missing out on everything.
However, if they’re your friends, they will suggest a cheaper alternative to spend time together. After all, as students, most of us don’t have much to spare, so we definitely know what it’s like to have to take a rain check!
3. Guessing costs
Some people end up estimating their expenses. However, a good budget is an accurate one! Thus, it’s important to be as meticulous as possible during the budgeting process. No, it’s not good enough to know that the venti-sized Starbucks coffee you had this morning cost “seven something”. Try to not throw out your receipts immediately for the very purpose of budgeting.
It’s also important to not leave things out. Even if you only spent $2 on that chicken rice, the cost will start to add up when you factor in all the snacks you bought at the vending machines and the drinks you paid for at 7-11.
After all, if the expenses are unclear, then it’ll be difficult for you to track how much you have left. Then, it’ll be harder to know how much more you need to reach your financial goal! This defeats the purpose of having a budget.
4. Using a tool you don’t really know how to use
Some people use budgeting apps, while others use Excel sheets. There’s also the option of having a physical budgeting notebook. There’s no best way; the best way is the one you’re most comfortable with.
If you’re unsure about how to use a tool or even uncomfortable with it, this would likely make you more demotivated and less likely to persevere in your budgeting habit.
Personally, I use a budgeting app, and it makes the most sense for me because I like to type down the cost of whatever I bought immediately after buying it. If I were to use an Excel sheet, I would find it inconvenient to boot up the app and navigate those small lines of numbers on a mobile device. Likewise, a physical notebook would be cumbersome to carry around.
However, if you’re someone who likes to record and revise your budget at the end of every day, an Excel sheet or a physical notebook might still work for you!
Budgeting can be weary, and it can even be tiring to keep track of our day-to-day expenses. However, it’s essential because it helps us manage our lives and have the experiences we want to have someday! For starters, try to avoid these four mistakes when it comes to budgeting!