Student life is a separate universe; full of pleasant experiences and adventurous activities but with very few worries or responsibilities. Students in many Western countries work part-time and have their own income but the situation is quite different in India. Very few students have either the opportunity or the inclination to work while studying. The traditional Indian way of life had always been support by parents or guardians, with the students allowed to concentrate exclusively on their studies, eliminating the distraction of other responsibilities like working and earning. Excelling in education through exclusive application of body and mind to education is the only way to achieve career goals and personality development.
Indian students have the rare privilege of studying without added burdens during their student life. Still, understanding money management in this period will help them a lot when they start pursuing a career and build their own life. Even if students do not have direct earnings from employment, they do have income streams from pocket money provided by parents and educational loans, grants, scholarships, etc. They also have several essential and unnecessary expenses with difficult choices. As such, the following tips on money management should prove quite useful to them during their student life as well as their later pursuits, whether they work and earn or depend on their family for their education and expenses.
1) Be Master of Your Money and Yourself – If you wish to become master of yourself and your money with total control, you have to plan and work for it. Remember, money is not just for spending but for making it work for you. For this, you should specify your financial objectives, develop plans to achieve them and execute the plans until the objectives become reality.
2) Understand Money Management Rules – Financial management rules for students vary from one household to another. One family may expect their wards to work part-time and earn part of the educational expenses, while another family may wish the children to concentrate only on the education and not worry about money. Still, education is a huge investment in present times, costing several lakhs from LKG to graduation or post-graduation and beyond. Discuss openly and frankly with your parents about managing your finances and expenses. If you are clear about what is expected of you, it makes your efforts in money management that much easier.
3) Planned Approach is Essential – The most important step in financial management is planned approach. Record keeping is very important. You should have an expenditure statement for every month, a planner that reminds you about due dates for various expenses and repayments and also individual files for storing each type of receipts, bills and other documents and paperwork related to finance management.
4) Never Give Out Personal Information – Your personal information details like bank account number, debit card and credit card numbers and other identity documents numbers are of high importance. You should never reveal them to any individual or organisation, unless you know them personally and it is safe to reveal such details. Avoid giving your credit card number to online websites, except on absolutely necessary occasions. If you suspect identity theft or even attempts to do it, inform your bank and relevant authorities about them.
5) Bank Account and Avoiding Cash Payments – All regular payments like rent, credit card payment, college fees, hostel fees, etc. can be paid by cash or cheques. Since cheques create automatic record, you should use them wherever possible. Open an account in a bank that gives you maximum advantages and deposit all excess cash in your account. Keeping hard cash is always an inducement to spend. However, you should ensure that your cheques are fully honoured and never returned for lack of funds or for other reasons, since cheques returned lower your credit score.
6) Financial Aid Planning – You should understand initially what types of financial aids you are eligible for. This will reduce the burden of your parents or guardians to a large extent. If you score high marks, you automatically become eligible for scholarships and grants for higher education. Otherwise, you can always approach a bank for an educational loan, since nearly all the banks in India are keen in extending student loans. Compare the student loan schemes of at least a few banks to evaluate their terms like interest rates, repayment holiday (the time allowed to you after completing education before the first instalment becomes due) and period of repayment.
7) Financial Aid Management – If you do not get any financial aid in the first year, do not lose heart but continue your efforts in the second year. Even if you have obtained financial aid in the first year itself, you should ensure that you avail it in subsequent years also until you complete your education and are ready for a career. On many occasions, it may be possible to receive more than one type of financial aid, like a combination of a scholarship and a bank loan. Utilise them but be sure that your total debt burden is manageable when you start your career.
Financial Aid Selection – However, you should not forget that these amounts come to you the hard way and should not be squandered on petty and wasteful expenses like vacations, partying, etc. At any cost, avoid using credit card finances, since they are the costliest method of raising money. Scholarships and grants are the most ideal since they need not be repaid. The next option is student loans but other types of borrowings should never be considered due to their high cost. If you are in doubt, discuss your educational funding with a qualified financial advisor in the presence of your parents.
The above tips on student money management are the first part in our desire to enlighten students in developing proper money management practices. We shall be following this up with more tips on students and money management very shortly. Kindly wait for our subsequent writings on this subject before you raise your questions, since they are most likely to clear all your doubts on this topic.