Financial Planning Tips for Students

Financial Planning Tips for Students

Some Do’s and Don’t for students who are:

  1. Studying in their first or second year in the College,
  2. Students who are pursuing their post-graduation in a University
  3. Students who are getting Scholarships
  4. Students who have taken loans for their Studies
  5. Students who are dependent on their parents for College Fees

When you have limited financial resources, as a student, it may be challenging to understand personal finance issues! When there is little money, and someone tried to tell you to save, invest or spend wisely, what would be your response?

Would it be possible to understand as to how making a budget and ensure that all your available resources are aligned to this budget? Furthermore, if there is a shortage, then is it possible to find out ways to fulfil the gap(s).

As a student, If these are your challenges and you are looking for a way out, then this blog is for you.

The purpose of this blog is to bring various solutions for students so that they can prepare this kind of a budget and then concentrate on their studies. If all the worries about money are taken care of, then concentration be given on career enhancements.

Based on a survey conducted by us in January and February 2017 across India in various universities and colleges, the following observations were noted.

How can be all the money related goals be addressed in one place? Is there a money tool which can be used to understand how much money needs to be allocated for the entire study period?

Yes, there is. It is called as “The Advantage Student Money Planner Calculator” Download this simple excel and calculate each goal’s money required as of today.

Creating a Budget for various phases of studies

As a student, one would like to know as to how much would be the total cost of entire education. Starting with college fees, to living cost.

Let's take an example here.

  1. A typical college course for graduation costs Rs. 10 lakhs for the entire 3 or 4-year necessary course fees. This includes the entry cost or the first time admission fee.
  2. Then, If it is residential, the cost of living in is around another Rs. 10 lakhs for the entire course.
  3. Add the cost of travel, medical emergencies, gadget purchase (Laptop, Mobile, accessories) be Rs. 5 lakhs.

How to create an emergency fund for exigencies

  1. Here, Having an independent fund for an emergency like a medical or accident, leading to hospitalisation should be covered either by a medical health insurance taken from a reputed standalone health insurance company and adequate coverage for basic health ensured.
  2. Also, it is strongly suggested to keep an emergency fund of Rs.1 to 5 lakhs as a stand alone fund.
  3. This purpose of this separate fund is to ensure that, should any emergency arises, like your parents, are not able to pay your college fees, or they are not well, or you are unwell, or you need some medical attention, then this fund should help you tide over the difficult times.
  4. You may find peace and joy in knowing that you have made this provision and didn't have to ask or beg to anyone in an emergency while you may already know that all your student fraternities around you is like you only and may not have resources to lend you money.

So, a total of Rs. 25 lakhs can be taken as an amount required for the graduation or one post graduation cost. Assumed, that these estimates are for a private or semi- government college and would be much less of a Government undertaking like Delhi University college.

So, if you wish to include graduation and post graduation, you can take a total of Rs. 50 lakhs budget.

Understanding how much will it cost for complete studies:

  1. With the above budgeting in mind, you are now prepared for a full cost analysis for your education, including primary and higher studies.
  2. However, understand that you do not need the entire amount of Rs. 25 or Rs. 50 lakhs at one go.
  3. However, if you have got a sanction or allocated for the same in the first year, it would be prudent to “invest” this lump sum amount in a secured debt mutual fund.
  4. Understand the risk involved and how that fund would work for you.
  5. Keep in mind, that the purpose of such a fund is pure liquidity, safety and some return, meanwhile. Remember, some return.
  6. Don’t chase high returns for this fund. Keep your parents or guardians as “nominees” for the fund and keep them posted also.

While getting a scholarship, how and where to invest spare money

  1. You may be getting a scholarship in full or partly.
  2. You may also be getting some grant or any prize money while pursuing your studies.
  3. Here, it would be wise to plan your money at hand and make suitable appropriate investments.
  4. Such investment would educate you on the importance of budgeting, personal finance planning and make you wiser even before you step into the real world of corporate life.
  5. You can invest in some well-balanced equity funds or debt mutual funds, depending on your amount, purpose, risk profile and time horizon.
  6. Learn and educate yourself about these funds or take the help of a financial planner to invest wisely.
  7. Monitor your investments regularly and check and recheck your investments to ensure alignments and rebalancing at appropriate stages.

How would you like to plan your vacations as a student?

  1. Well, while you are a student, but college trips, or longer college summer or winter vacations, sometimes tempt you to go out and take a break!
  2. How would you plan the money for such purposes?
  3. Well, try and make small savings from your allowances.
  4. Look at small assignments from other seniors like research scholars who have funds sometimes and they may need your time help for their work.

How would you like to plan for buying gadgets as a student?

  1. Laptops, mobile, accessories, music systems, and the small list sometimes becomes long!
  2. In today’s modern world, so many options have come up to make our life better.
  3. Convenience and time-saving gadgets have become not only necessary but sometimes essential!
  4. Also, technology changes every five years, bringing in urgent need for improving your devices and upgrading old one to the new speed and capacities.
  5. So, keep this in mind while making budgets and plan ahead to incorporate them.

If you are doing well in the above areas, and are happy with your money, finances and budgeting, perhaps, it's time to help those in need of your generosity!

  1. Think of giving back to the society.
  2. Start thinking of taking out time for good structured and organised organisations like enactus who have a reputation as well as bring you recognition.
  3. Being generous is a way of life as it may inculcate an ordinary human being in you while it may also improve your communication and attitude skills.

You may now be on your way to an entirely planned student life.

  1. If you are progressing well on the above lines, it's perhaps time to share your success story with other students.

  2. Help them to explore a life like yours and inspire others to follow your footsteps.
  3. Don’t forget to share your great thoughts through your personal blogs, emails and other forums also.
  4. Just, share this blog and such ideas with your friends to let them also know that you care!
  5. Your life as a student may also become an inspiration, but with shared “comments” in this blog itself.

All the best and have a great student life. After all, it's your one life. Don’t miss all the great opportunities and enjoy each moment. Live each moment Kingsize. Inspire others. Make your actions replicable. Create stories from your successful life. Invite other students to explore your ideal life. They would be thankful and happy for you for the kindness.

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