Building a Financial Foundation

Varsity is an exciting yet hard time for most of us, being independent and away from home & having to make your decisions & managing your own money are just a few of the things you'll learn in varsity. Having a plan in place & sticking to it can really ease the journey of the annual competition we call "so you think you can graduate?". Here are a few tips on how to build a strong financial foundation for your transition into varsity & into your early working years.


•Budgeting


A budget in its simplest definition is simply a plan of how you plan to spend your money. One of the easiest ways to make a budget is to make a list of your fixed expenses such as rent, groceries & self-care. Then another of your variable expenses such as entertainment, clothing, comfort food & relationships (truth is umjolo requires money) & minus that from your income & boom you have a basic budget. Now your income is basically any money you receive regularly, be it a monthly bursary allowance, money you receive from home regularly or a side hustle. If you aren't too sure about how much your monthly expenses are, perhaps you should consider linking a budgeting app to your bank account (I've found 22seven to be a really easy-to-use budgeting app) or going old fashioned & just going through your bank statement & listing your expenses. Knowing your expenses is key when developing a realistic budget.


•Living within your means


As a varsity student living within your means is very important, an essential skill really, I mean R50 here, R100 there, one night out & literally before you even know it there's a lot more month at the end of your money. Try to avoid spending on any frivolous things, something that works for me because I know I like things and spending money isn't a problem, After I've deducted my expenses, I invest the money left over before I even get a chance to spend it.


Debt Management


Debt is a sneaky bastard and can overwhelm you and follow you many years beyond varsity. Use only one credit card & avoid using it for any unnecessary things. If you do make a credit purchase, make sure you pay it off as soon as you can to avoid interest charges. Getting credit from an early age is good because it helps you grow a good credit score. Having a good credit score is good because once you graduate you may want to get a loan, buy a car or rent an apartment or eventually buy a home. A good credit score matters for these kinds of purchases & can greatly improve your chances of getting approved & getting good interest rates on loans.


•Setting up for the Future


While managing your expenses is key it's also important for you to give some attention to your savings. It's never too soon to start building up your portfolio (easy equities is a really nice place to start your investment journey, a very user-friendly platform) or an emergency fund, an emergency fund can really rescue you when you have an unexpected expense (it can really come in handy after those hectic weekends or night outs where you end up spending a lot more than you'd initially planned to). Consulting a financial advisor is a really good starting point if you want to start planning your financial future, you should have access to a financial planner at your local bank.


You can start saving from any amount, even with just R200 a month (unit trusts are a great place to kickstart your investment journey), although it might not seem like much over time it can really cushion the damage of any unexpected financial shock you may experience. Managing real-life expenses meanwhile also saving for your future financial goals can be a daunting task but if you adopt good financial habits early you can lay the groundwork which will allow you to reach your financial goals and secure that bag.


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Author: Sihle Hlatshwayo


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