Financial Planning: Six ways to become fiscally independent

Ever looked at your bank account and noticed that you were down to your last five dollars? Then you know the importance of having enough money left to get you by till next payday. Let me introduce you to a concept you may of heard of…financial planning. Financial Planning is the process of rationing out your income into two parts: disposable and non-disposable income. It’s hard being a student– trust me. Especially when you’re trying to balance work, school and a thriving social life. Well, here’s the scoop. If you follow these tips you can go from broke and irresponsible to fiscally responsible!

  1. Only buy something when necessary.
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    The key to this is to only buy something not out of boredom or just to have it. You should justify your purchase. Between books, food and living expenses, there’s not enough disposable income to justify buying frivolous things. So don’t do it. Every time you want to purchase something, you should stop and assess whether or not this is a good investment. Steps towards spending less can include living with roommates, taking public transit, and cutting down on shopping and eating out. Use a budget calculator to find out what’s right for you.
  1. Take advantage of retirement accounts.
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    The thing about retirement accounts is that it’s very easy to set up and very easy to start saving. Especially if you start early. A benefit of starting early is that you can put minimal amounts towards the account instead of larger sums– meaning it won’t cost you much. You’ll have backup money if you ever run into a problem later in life, or even borrow from it if you need to put down a down payment for a house or a deposit for an apartment.
  1. Create and stick to a budget.
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    Creating a budget can be a daunting task. First you have to list all of your sources of income and make a list of all your necessary expenses. Sources of income can include money from your job, financial aid, and even your parents/other jobs etc. Necessary expenses would include living arrangements, groceries, necessary clothing (i.e. jackets, shoes, etc.)
  1. Watch your credit.
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Yes, it may have your name on the card, but that doesn’t mean that it’s your money. A credit card is a means of borrowing money in which you have to pay back eventually. With a bunch of interest. Don’t take that too lightly, cause it can catch up with you fast.

  1. Pay off higher interest debt first.
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Continuing on the debt issue, the money you do spend or not pay towards your bills will accumulate. If you don’t pay these off, it can mean big trouble. It can accumulate interest starting from 5% to even 20%. Paying your debt on time and efficiently is key. Make sure to know when your payment is due and pay it in advance (so you don’t incur late fees). Higher debt can even double or triple your balance if you leave it for too long.

  1. Know your student loan repayment options.
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Contact your financial aid service or even consult your school’s financial aid office to determine a repayment option that fits with your lifestyle and budget. Contrary to popular belief, student loans are not covered by bankruptcy (or similar processes). That means it has to be repaid in full in a timely manner.

For more information of financial planning consult this article by Clearinghouse University

Article by: Andrea Lewis

Andrea is a second year student of Humber College’s Advertising and Marketing Communications program. She is an aspiring social media strategist. She likes food, drinks and being active in the community.

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