Hi girls and happy Tax Day!
Hopefully all of your finances are sorted out for the year and your budgeting is going well—wishing you lots of zeroes in that bank account. In honor of this wonderful (and anxiety-inducing) federal holiday, Panhellenic VP Finance Bettina Devadoss and your Blog Editor-in-Chief Shreya Vaidhyanathan bring you some financial wellness tips, specifically for college students.
Basic budget breakdown
The bare bones of your money split should be as follows: 50% for needs, 30% for fun money, and 20% for investing. Half of your income should go towards rent, bills, and food. This takes care of your essential expenses, and the rest of your budgeting can be freer. The next big chunk is your fun money: eating out, shopping, trips—all the lifestyle things. If your goal is to build up your savings, adjust this as needed, but know that you’re allowed to have fun with your money as long as you're being responsible. Finally, you absolutely need to be putting aside money from every paycheck towards your long-term investments. All of your friends should be doing the same thing, so keep each other accountable.
Bettina’s tip: “Financial literacy is one of the most empowering things that a woman can possess, and learning it younger sets women up for lifelong success.“
Shopping sustainably
It can be really tempting to splurge on an all-new closet for every new season, school year, and era of life…but you will quickly learn that in college, that’s just not sustainable—both for your bank account and the environment. It’s definitely better to splurge a little on a closet staple than buy fast fashion for every little event. Additionally, cost-per-wear matters more; if you’re going to buy something expensive but nice quality, and you know you’ll reach for it a ton, that is probably a better purchase than a cheaper one-time wear.
Plan for larger expenses
You can start a separate account for bigger future purchases, so that you can’t mistakenly spend the money reserved for those things. Examples of more expensive buys include a spring break trip, concerts, and sorority dues. By adding into these separate accounts all year, the balance adds over time. This way, you are visually breaking down how much you need to save, which will keep you both motivated and prevent yourself from being overwhelmed. Keeping yourself informed on how you best save and spend money is a great starting point for building up to bigger expenses, and will set you up for success down the road. Side note, if you are going on a big trip with your friends, plan to split groceries, food, and transportation costs (gas, rental car expenses, Ubers, etc.) to even out your vacation bill.
Bettina’s tip: “While investing is made to seem complex, it can be as simple as intentionally adding a couple of dollars to an account every week.”
More on shopping
A good rule of thumb to avoid impulse buying and boredom shopping is to wait 24 hours after adding something to your cart to allow yourself time to decide whether you really need it, and make sure you have multiple places you could wear the item. If you’re looking to make some money yourself, consider selling or renting out some of your own closet pieces on platforms like Depop, Poshmark, or even your own chapter related chat. On that note, consider borrowing and swapping formal dresses from your friends to control costs.
Bills, Debit, Credit
Having a high credit score is important for your standing when renting apartments, getting better loan rates on future property purchases, and can even impact your job. The easiest way to build credit in your twenties is through opening a credit card and ensuring you pay your bills on time. One recommendation is to set calendar reminders for your bills to make sure you pay them on time. Repeatedly paying bills, like rent, can definitely improve your credit, so make sure you’re taking the time to learn about how to handle all of that.
Bettina’s tip: “The importance of financial literacy cannot be overstated as it impacts every woman across all professions.”
Investing your assets
If you have a job in college, you should be contributing to a Roth IRA, which is a tax-free investment that gains compounded interest. This is a foolproof way to keep your money tucked away and working for you, even while you’re not doing anything with it. Another great tool to utilize is any high yield savings account. This is an alternative method to making a passive income and having the money you’ve made multiply!
Learning to budget
When you are just starting to learn to budget, a good way to start is to keep a weekly check in of purchases. Even tracking your expenses consistently for a week or two can teach you a lot about your spending habits. One option is to make a spreadsheet and split into major categories with items like groceries, dinners, and travel. From there, it becomes easier to realize your small purchases throughout the week that add up and overall teach you to be more efficient.
Bettina’s tip: “The best way to budget your money is to spend two weeks tracking every expense; you can’t adjust your spending until you’re truly transparent about each purchase.”
I hope you walk away from this blog with a better understanding of how to use your money wisely. Keeping up with college life can get expensive fast, so maintaining track of your own expenses and spending habits can go a long way. Happy saving!
All my love,
The Blog Editor-in-Chief