(5 minute read – student money hacks)
Hi there accounting fans! Check out these student money hacks!
So you are a student. If you’re not, I’m sure you would have been at some point in life. This guide is written for students who are studying in University. This guide is also written from a pretty general perspective so that both part-time and full-time students can benefit from it. As a student you are usually forgoing current income opportunities to open up future income opportunities. This naturally means that many students are often struggling to get by. I’ve been there myself and I’ve worked out some hacks to enjoy all the perks of being a student (free time, hanging out with friends, travelling) without being broke!
Student money hacks #1: Have at least four bank accounts
Money management using multiple bank accounts isn’t a new idea. So I’m not going to claim that I invented it. But it IS a good idea, so it often gets repeated by many other financial bloggers and writers out there. The idea is to have separate bank accounts which contain funds for the different things that you want to do in your student life. To sum it up, the four bank accounts you need to have are:
A daily spending bank account
Like the name says, this is for your daily spending. If you are working a part-time job (or full-time), receiving a student allowance or a scholarship, this is the account that your money goes into. This is the account you use for daily spending. By daily spending I mean spending on important, basic necessities that you couldn’t possibly live without. Things like:
- Rent
- Power and internet/telephone bills
- Laundry and cleaning
- Groceries and takeaways
- Fuel or transportation
So every time you get money into this account, you should leave about 60% of your income to cover all those basic necessities. With the remaining 40%, we can start divvying it up into the remaining three bank accounts. This is the basis for all your student money hacks!
A short-term ‘Fun’ account
Student life would be BORING without a social life. So its important to have some money to enjoy the good stuff. From the 40% that we’ve set aside from our income, 10% of that should go towards the ‘Fun’ money account. Money in this account can be used to pay for:
- A night out on town
- Drinks/Food with friends
- Buying boardgames (very important to me)
- Buying videogames (also very important to me)
- Cheaper travelling experiences
- Supporting your hobbies
Money is meant to be spent. So might as well spend it on stuff that will make you happy. There’s no point in having student money hacks otherwise!
A long-term ‘Experiences’ account
Now we have 30% left, 10% of that should go into the ‘Experiences’ account.
Being a student is also about having the freedom to experience new things. For many of us (myself included) this meant travelling. When I first came to Aotearoa New Zealand, I made it a point to travel the whole country and experience the sights and sounds! This made for many awesome memories with my friends. Naturally, if you have a partner and children, money saved in this account is also for you to take them on these experiences as well.
Experiences need not be expensive and if you are willing to hitch hike/couch surf/eat cheaply there is a lot you can do for a little bit of money. So money in the ‘Experiences’ account can also be used for some expensive luxuries (if you have enough money) like a gaming PC (or console… if that is your thing, console peasant!) or a car (which can also help you get places to experience even more things).
An ‘investments’ account
I’m a huge believer in making your money work for you. Letting your money rot away in your bank account is the worst possible thing you could do with your money. This account is for you to start slowly accumulating money to make your first few investments. So the remaining 20% of your income should be going into this account.
What to invest in? Good question, you first need to consider your financial goals based on where you are right now.
Read this article on setting your financial goals to find out more!
From there, you can consider where to put your money in. If you are a young-ish person with more than 10 years left to retirement, shoving money into high risk investments makes sense, as you can ride out the drops in the market over a long period of time and have enough money to use in the future. This is a great way to save up for your first home (if that is a priority for you) in 10 to 15 years from now.
Learn more about high risk investments here!
If you have some short term financial goals (like buying a car in the next year) you can look at putting more of your investment money into low risk investments that will protect your money over a short period (less than 5 years) of time.
Learn more about low risk investments here!
Either way, you need to figure out what you want your money to do for you and pick a strategy that suits you. When you have saved about $1,000 in this account, you should start looking at investments you can put your money in! From there on, you may even choose to tweak your investment strategy and have money going straight from your daily spending account into your investments.
These investment habits may be a student money hack, but they can be useful hacks for when you graduate as well.
Student money hacks #2: Avoid debt at all costs!
Now, unless you are living in a country where credit scores are a thing (looking at you USA!!!) there is no reason for a student to own a credit card. Actually, there is no good reason why anyone should own a credit card.
Debt also includes other forms of debt, like pay day loans and even ‘free’ debt like Afterpay, Oxipay and all the multitudes of buy-now-pay-later services out there. As a student, you need to have certainty and financial security. Life and studies are hard enough without having to worry about missed payments, super expensive interest charges and penalties.
In most cases, the 60% that you put aside into your daily spending account should be enough to cover your living expenses. Then the 10% you put aside for Fun money can be used for more frivolous purchases. Also, the other 10% for experiences money can be used for travelling.
If you only remember one of the student money hacks, this is it:
Never use money you don’t have to buy junk that you don’t need.
Examples of junk you don’t need inlcude:
- The latest phones
- A high end gaming PC
- Videogame consoles
- Liquor, beers, smokes and other intoxicants
- Fancy clothes and designer wear
And the list goes on. But you get the point. If you can live without it, chances are you don’t need it. If you got the money for it, sure, go ahead and buy it. But never buy anything with money that you don’t have.
House loans are different – but if you are still a student, chances are that you’re a good decade away from owning your first home, so we’ll save that discussion for a different time.
By refusing debt, you are hacking the financial system already. This is definitely the cheapest and most effective of all student money hacks there is!
Student money hacks #3: Think cheap, buy cheap,live cheap, be cheap.
Being cheap is an underappreciated art. It is about maximising the most out of your money through careful observation and straight up hustling. I could write an endless guide on cheap student money hacks, but that would require a whole new article on its own. Here are some of my favorite ones (which I’ve used myself as a student) which are 100% legal (because you don’t want to be cheap by breaking the law).
Showering at uni
If you live in a cold country, you will know that your hot water showers cost you expensive power bills! Even if you don’t use heated showers, the water bill alone is eye-watering (pun totally intended). So what does a broke student do? They shower at uni. High powered showers, warm water and well maintained spaces – much better than the dingy old flat that you are renting.
You’re paying so much in tuition fees, you might as well make full use of the uni facilities! Bring a baggy with your toiletries and change and you can save heaps.
Getting free food/drinks
Back in my PhD days, we had access to the staff room and free-flowing coffee/hot drinks. So I never spent a single cent on coffee my entire student life. I’m sure in your uni, you may have access to a similar setup. Even if you can’t access free food directly, have a chat to people working in restaurants/cafes. In most cases, at the end of the day, they have to throw any unsold food. Do them a favor and ask if you can take their old food instead.
Here’s an example of a conversation between a poor student and a cafe owner:
Student: Hi there, would it be alright if I came by and collected some of your unsold meals and help take them off your hand?
Cafe owner: Why, yes, that would help very much thank you! Please come around 5pm everyday and if we have anything left we’ll give it to you.
This hustle isn’t 100% foolproof, as cafes may already be giving their old stuff to food rescue charities or other poor students who got there before you. But hey, its always worth asking!
Always be bargain hunting
Op shops, second hand shops, even rummaging through your local bundle shop will net you some sweet deals.
You want to buy a new laptop? Check the prices online. Maybe get a secondhand one at a good price? As long as it does what it needs to do, does it really matter?
Want to buy brand new appliances? Check you local department store. Then check their competitors. Never be afraid to tell your local department store that their competitors have a cheaper price. Challenge them to match their competitors price! If they say no, walk away and give your business to their competitor!
Do more with less. Lower your material standards a bit if you have to. Remember, the main thing is to get through uni life with as much cash stashed away in your investments!
Take advantage of your uni databases for some sweet, sweet, value based investing!
Welp, ok this one is a bit more specific but chances are that as a uni student you will have access to some very fancy and very expensive paid financial databases as part of your tuition fees.
These are the very same databases that professional traders use to make investing decisions. So what does a financially savvy poor student who can’t possibly afford access to these databases normally do?
They use the heck out of them.
I’ve pretty much built up my stock investment watchlist through uni databases. I mean, its all paid for by my tuition fees, so I might as well use it! This has helped me make informed investment decisions on valuable stocks to buy, which in turn helps me get a head start on my investing journey. Of course said databases are useless if you don’t know what you’re doing, so if you can find the time to read up on value based investing, I highly recommend doing so.
That’s about all I have to share for student money hacks for now. If you aren’t a student, you can still make use of some of these hacks in your daily life, especially setting up separate bank accounts – that is a powerful financial tool. If you are a student, I hope this guide has been useful to you. May you find financial confidence wherever you go.
Stay positive!