You’re not alone in this personal finance journey if you’re a student or intern who struggles to manage your money. Many of us begin life with little understanding of how to handle our finances and often pick it up via life events.

However, given that the fundamental institutions and technologies through which we do business are changing nowadays, we cannot ignore how important it is to be financially educated. For instance, debt may take many different forms, and getting into debt is growing simpler and simpler. All of this makes it challenging to manage your spending, which makes it challenging to manage our money wisely—but it’s never too late to start, is it not? The easiest way to get started is by understanding why you should and why you should

Why You Should and Ola Majekodunmi, the creator of All Things Money, a website that equips young individuals with the money skills they need to succeed in adulthood, and Angel Zhou discuss their personal finance experiences in this area.

Let’s dive into the challenges and strategies to better money management.

Getting started with personal finance

why you should and Every person’s experience is different when it comes to personal finance, whether you’re a student with your first summer job or an intern overseas in a place you don’t know very well. We all have various starting places, different financial struggles, and different dreams. Through these several routes, we get the knowledge required for improved money management.

Ola asserts that attitudes and behaviors related to money begin to form very early in life. Numerous studies have shown that our financial habits start to form around age seven. Though it’s a pretty relatable sentiment, she laughed, “I don’t recall how I handled my money when I was seven years old, if I even had any money then.

“Since I attended boarding school, the first time I can recall handling money was when I was 11 years old. I received my first personal bank card at that time, and my mother used to transfer my weekly stipend. Because I didn’t have parents nearby whom I could simply kind of beg for additional money from, I used to make sure I budgeted wisely.

why you should “Since I went to boarding school, I can only remember touching money for the first time when I was 11 years old. At that time, my mother used to send my weekly stipend and I got my first bank card. I used to make sure I planned well since I didn’t have parents nearby whom I could just kind of ask for more money from.

Typically, starting our first job causes us to develop a secondary sense of money. Of course, there’s a lesson that occasionally has to be learned the hard way, which entails utterly blowing our first few paychecks.

Angel, who spent a large portion of her late adolescence and early adulthood living alone in the UK, is still developing her personal finance philosophy.

I wasn’t on the earning side until I entered university, so I wasn’t able to handle my own money or comprehend earning and spending. My budget was really constrained because my parents clearly didn’t trust me with that. Normally, I would ask them if I needed something, and they would weigh my options with me. My parents have taught me a lot about how to make wise financial decisions.

Since that time, Angel has learned to deal with the difficulties that come with maturity and a little bit of financial freedom.

“I remember looking through my contract. During my first year of college, I had my first job as an associate. I believe the hourly rate was approximately GBP 8 while I was working on it part-time. In my estimation, a cup of coffee would cost GBP 4. That equates to two coffee glasses.

She wondered why she would spend that much money on two daily cups of coffee in light of this. When she read her contract and saw how much she was being paid per hour, she said, “It was like a moment of realization.” Although we all have different financial experiences and backgrounds, some tools and tactics may help us along the path. Budgeting is the first of them.

Why budgeting is important

Making a strategy and a budget serve as a compass and road map for your financial trip. Yes, even when you’re broke (we’ve all been there), you’ll need them. They are the core tools.

Budgeting first and foremost gives you insight into your financial situation. You can clearly understand your financial situation, including how much money you have and where it is going. Without this knowledge, you are going aimlessly, thus it is essential. “A lot of individuals attempt to convince me that they want to help. I enquire as to how much they “afford to save.” But they are unable to tell me because they lack a budget, Ola said.

Creating a budget also enables you to control your ongoing costs. You can identify areas where you could be spending too much and make changes to get back on track. How you’ll handle debt, crises, investments, and other things will be part of your overall strategy. The ultimate objective is enduring financial security.

Setting your financial goals

You need to be aware of your fundamental financial objectives before you can begin budgeting. These offer your money direction and purpose. Asking yourself “What am I working toward?” and “Why am I saving or investing?” will help you to determine these objectives. They provide you a real motivation to save and make more sensible financial decisions, which will keep you motivated. You’ll be able to create milestones along the road to assist in measuring your progress once you know what you’re aiming for.

You can prioritize your spending and savings when you have defined goals. By doing so, you may spend less money unnecessarily and allocate resources to what is important to you.

“What are your objectives and what do YOU want to do, regardless of social media, what your friends and family want you to do, or what you were instructed to do? Since I work for myself, people frequently ask me when I plan to purchase a home. Right now, I don’t want a mortgage. Ola explains why it’s critical to pinpoint the objectives that are essential to you: “I’d rather spend that money exploring the world.

Something shouldn’t be an active goal if you’re not ready to spend money on it unless you are confident that you can commit to it, or at the very least, that you want to. Additionally, not all objectives are equally significant at all times in life, so choose wisely and be realistic about how much you need to spend on certain pursuits.

Now that you’ve determined your objectives, you can use them as the basis for developing a budget.

Budgeting approaches

Unfortunately, because every one of us has different demands, there isn’t a single budgeting strategy that completely suits everyone.

But don’t worry, there are a ton of authentic and homegrown strategies that might assist you. Here are a few tried-and-true techniques.

• The 50/30/20 rule: According to this financial advice, you should set aside 20% of your salary for savings and repayments and 50% of your income for essentials like rent.
• The system of cash envelopes: You split your money into various envelopes, with each one designated for a certain expense area, such as grocery or entertainment. When your next payday or budgeting cycle rolls around, you won’t be able to add to the amount you’ve already spent in that area.
• Zero-based budgeting: This strategy differs in that you allocate every dollar to a certain goal. Your revenue for the month, divided across the categories, should equal zero after each month. Additionally, no category is certain to be mentioned each month, keeping your priorities open. It makes you thoughtful about how you spend your money and prioritize purchases according to your financial objectives.
• Automate your savings: If you place savings at the top of your list of priorities, this may be beneficial. As soon as you get a paycheck, set up automatic transfers to your savings or investing account to ensure that you have money set away that will stay untouchable before you spend a dime.
• Debt avalanche or snowball: If you have several debt payments, this is something you might want to think about. The snowball technique of debt repayment begins by paying off the smallest debt and working its way up. The avalanche technique, on the other hand, gives priority to debt with the greatest interest rate.

There are undoubtedly more options available, but the important is to pick the ones that best suit your lifestyle and financial objectives, as well as stick to your spending plan. It’s crucial to keep in mind that creating a budget is a dynamic process that may change as your financial position does, so be adaptable and willing to make changes as needed. Don’t let your personal finances stress you out needlessly.

“You have a spending limit that you set for yourself and may utilize to buy the goods you prefer. If it exceeds that budget, I’ll probably borrow money from next month if I truly need it. Angel disclosed.

“I think living is in the present,” she continued. Take action to make yourself joyful. Yes, we have these systems to aid in better organizing our lives and our personal finances. Though I also believe that doing something that makes you happy is crucial, it also benefits us in the long run.

Angel’s sage counsel? Spend money on the things you want, but do so sustainably and responsibly.

The breakdown

After discussing budgeting, let’s quickly go over some crucial actions you should take in your personal finance journey.

• Set financial objectives: Start by establishing clear financial objectives. These could be medium-term, like a retirement fund, long-term, like a car, or even short-term, like Eras show tickets. (But let’s face it, that would alter every aspect of our existence.) Initially, make a list of your financial goals and needs before being more detailed and explicit. Quantify them by assigning a precise sum or goal so you can quickly see how much cash you need to set away.
• Set them in order of importance: Based on their urgency and timeframe, do this. Your resource allocation will be guided by this. For instance, if your objective is to save for a new gaming setup, you should create a timeframe for when you want to make the purchase. Determine the percentage of your money that you can really lay aside throughout that period. Basically, the ‘objective’ would be to accumulate enough money during that time to buy the setup.
• Establish a budget: Work on your budget after you’ve established your timeframe. Describe your monthly income and necessities of living. (Be accurate and reasonable in your predictions!) The rest should be divided among your financial priorities. Savings, membership fees, debt repayment, etc. are included in this. You should appreciate what you still have. Whatever you spend your money on—even fun—make sure to keep track of it!
• Create an emergency fund: After your costs are paid for, you could wonder what’s left and whether you can create an emergency fund. The point is, it’s just in case—it’s for a rainy day. You may begin right away and steadily increase the amount you have saved by adding a little whenever you can. Aim to save enough money in your fund to cover your living expenditures for at least three months.
• Pay off your loans and debts: Debt is sometimes unavoidable. It still qualifies as debt when, for instance, many individuals use credit cards to be able to buy basics. Since skipping a credit payment might have negative effects, managing your repayments is quite important. Make paying off your high-interest obligations a priority and set a deadline for doing so.

Personal finance is a long-term journey

Of course, eventually, juggling these priorities calls for restraint and composure. It’s a long road, and development could be sluggish. Although there will be many changes in life, we realize that sometimes it can be challenging and stressful. When it comes to your money, you’ll face a variety of difficulties; for this reason, it’s critical to be adaptable and willing to change as you go. You’ll be more ready if you have a strategy and are aware of your objectives.

Make sure to periodically review your financial objectives, income, and outgoings. Your needs may have changed over time, and your previous budgeting or plans may no longer be appropriate. Over time, your priorities, life, and even ordinary living expenditures may change. Maintain your dedication to your strategy, and you’ll notice results.