Personal finance is, well, personal. Some girls have had a budget since high school, while others are just now opening college checking accounts. Some girls are scared of using credit cards, while others have their Discover account number and expiration date memorized. No matter your personal budget style, there is a personal finance strategy for you.
For the Over-Spenders: The Envelope Method
The Envelope Method is a bare-bones approach to personal finance that is exactly what it sounds like. After creating a budget, cash is stored in labeled envelopes (or jars, or whatever you’d like). While this seems overly old-school, the idea is that separating your money will keep you more aware of exactly where your cash is going. Once you get paid, cash your check and separate your cash according to your budget. Assign an envelope to rent, to groceries, and to any other necessities. Then allow yourself a “Splurge” envelope–you’re allowed to spend the cash from this envelope on whatever you’d like, but once it’s gone, you’re not allowed to dip into any of the other envelopes! If using this method, make sure to save all your receipts so you know exactly how fast your “Starbucks” envelope empties out (and why). For a more modern version, you can keep a spreadsheet with cash totals and simply deduct the amounts whenever you spend from each envelope.
For the Guilt-Motivated: Mint (and other apps)
Nothing makes your money–or lack thereof–more apparent than cold, hard, data. Mint shows you the data to keep your budget in check. The idea is simple: connect your checking account to Mint.com (no personal information is compromised, don’t worry), and the app will analyze your spending for you. Mint will show you what percent of your budget goes to “luxury items” or grocery stores. It can even show you how much you spend at a particular store, so if you’re obsessed with Target, you can see how much the dollar section is really costing you over time. Besides the data, Mint also has a great goal-setting feature. The app lets you set goals, like paying off a loan or a road trip to Disneyland, and a deadline to achieve each goal. Then Mint shows you how much money you need to save per week or month to meet your goals, and lets you see how close you are to the finish line. Reminders of your financial dreams can keep you from splurging on unnecessary items. Not into the Mint interface? Check with your bank to see if they have their own budget helper app!
For the Type-A Prepper: Credit (Building) Cards
College students are usually warned to stay away from credit cards, but a simple debit card won’t build your credit the way a credit card will. And while keeping yourself from bad credit is important, building good credit can move your financial status from good to great. Research your options (don’t go with the first “pre-approved” offer you get in the mail) and sign up for a credit card. Only spend money on the credit card if you have the cash amount in your checking account. Then make sure to pay the bill in full every month so you build a stellar credit reputation! Credit cards can also serve as a back up plan, if you make sure not to use them for anything else. While it’s important to keep a cash emergency fund, a credit line can help you in a pinch, like a towed car or emergency flight home. While many credit lines start low, at around $500, a $500 credit line can be extended to $1500 in as little as two years, if you prove to be a good “borrower”.
For the “Out of Sight, Out of Mind”: Automatic Transfers
If you will spend any money you know you have, from a credit card to the last quarter in your purse, consider setting up automatic transfers and deposits. Usually your employer will give you a form to take to your bank to set up direct deposit of your paycheck. See if it’s possible to have a portion of your paycheck deposited into a separate savings account that can’t be touched by your debit card. If you can’t direct deposit into two different accounts, consider setting up an automatic transfer from your checking account to your savings at the start of every pay period to achieve the same effect. Not even seeing your money before putting it into savings means you won’t even miss it.
Even if one personal finance strategy doesn’t work for you, never give up on achieving financial stability. It’s easy to ignore your financial status while your parents still pay your phone bill, but these years of relatively low responsibility are the best time to set yourself up for a lifetime of Smart Girl saving!
Sarah delos Santos