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How Students Can Maintain Financial Stability

A guide to managing your finances during the cost of living crisis

Food, fuel, and energy prices are skyrocketing due to the cost of living crisis, making it more important than ever to manage your finances effectively. These tips may help you maintain a healthy cash balance in these difficult times. It is important to understand that your finances are made up of four key principles; income, expenses, savings, and investments.

Income is the starting point of your personal finance. This could include your wages or salary from your job, any dividends you have received from investments, or rent payments if you own any property. If this is a stable and secure income every month then you are at a good starting point to start managing your money effectively. It can be difficult to balance a part-time job with a university degree but even a few hours at the weekend can make a difference. If you're desperate for some money perhaps sell some of the clothes you don't wear, the books you don't read and the DVD's which are collecting dust.

How can I cut my living costs?

One of the ways to cut your living costs is to meal prep which means cooking your meals in large batches ahead of time which you can then refridgerate and eat over the next few days. This will save you money as you are buying and using your ingredients in bulk as opposed to buying lots of individual ingredients which will likely end up being wasted. Not only that but it saves you time and you'll probably be less likely to spend your cash on an expensive takeaway. It's also a good idea to browse the supermarkets after 6pm. You're likely to find some massive reductions on items which are about to go past their best before date but are still perfectly fine to eat. Furthermore, a lot of supermarkets offer loyalty cards that allow you to collect points from money you spend at that shop. These can then be redeemed for vouchers which will save you a little bit of money over time.

Textbooks at university can be really expensive, but no one said they had to be new. Try and buy your textbooks second-hand as these can sometimes be half the price of the original value.

As a student you have access to a variety of discounts which you shouldn't be ignoring as these can be as high as 20% off your purchases. Websites like StudentBeans and UNiDAYS give you access to hundreds of discount codes for in-store and online shopping. You could also purchase a 16-25 railcard so that you can save a third off all train travel.

Being smart with spending is critical to managing your finances effectively. In this context, I will be referring to the money left over after all your bills and necessities have been paid (also known as disposable income). When receiving your pay-check it can be tempting to treat yourself after all of your hard work, but spending less can have its benefits in the future. It's a good idea to limit your spending through a budget that works for you. You could halve your disposable income and that will be the figure you use to either save and invest and the other half you can spend freely on whatever you want.

So should I save or invest?

Choosing to invest or save can be a tough decision but it depends on the risks you are willing to take. If you aren't a risk taker, it may be better to put your money into a high interest savings account so that you earn a little bit of money on top of the amount you are saving. This may come in handy as a rainy day fund for any unexpected costs which may arise in the future.

Investing requires a bit more time and research. It's good to know which investments are going to be risky and which are going to be safe. If you're wanting to take a safer route, then you should consider Government bonds but if you're comfortable with some risk maybe invest in some shares. You could even have a mixture of both - it's really up to you. Investing in multiple different companies is known as diversifying your portfolio which can actually lower the risk of your investments. For example, if you were to put all of your money into one company and it performs poorly, you are going to lose a lot more of your money than if you invested into multiple different companies in different industries.

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