The stupidest thing you can think as a student is that you’re going to be rich thanks to your fancy degree and good grades, so why not spend all that money while you’re still young and beautiful?
I have friends who started making a full-time living as an insurance agent, private tutor or start-up owner back at school and have never looked back. Others, on the other hand, lost tens of thousands of dollars gambling or racked up enough student loans to buy an HDB flat with.
For the average student who falls into neither camp, here are two things you should do before you graduate that will give you a much sounder attitude towards money when you enter the real world.
Live without allowance from your parents for 6 months
If you’re lucky enough to receive an allowance from your parents, you probably don’t think of money in the same terms as your friends who don’t. Blowing a week’s allowance at Zouk is a lot easier when you didn’t have to lift a finger to earn that cash.
That’s an attitude that could prove very damaging to your financial health. I have friends who didn’t start saving money until they were well into their thirties, when they realised they had to get their act together, and every one of these people was receiving money from their parents throughout the entire course of their studies.
Live without your parents’ financial assistance for 6 months and I promise you’ll have a fresh perspective at the end of the semester. Don’t worry, you won’t starve—a part-time job as a private tutor or in retail or F&B should help you earn enough to survive, assuming you’re not already some high roller at the casino and don’t have loansharks threatening to burn your house down.
Those 6 months will teach you what it’s like to live on a modest income and be forced to prioritise, budget and, most importantly, cut some luxuries out of your life. You’ll realise just how much sweat and blood can go into making a living, and hopefully when you start working full-time after graduating you won’t be so quick to spend every cent you make.
Save up for one big thing
When you grow up and enter the “real world”, you’re going to realise that being able to afford to buy original video games isn’t as awesome as you thought it would be—if that’s the only thing you can afford.
No, adults have a lot more to worry about, financially-speaking, than whether they should upsize their McDonald’s meal. There are big-ticket items that can, if you’re not careful, exhaust all your savings and sign you up for a lifetime of debt… cough… HDB… cough.
Saving up for a large purchase isn’t just about praying for a Toto win. It’s about carefully reviewing your income to see whether you can afford what you want or whether you should settle for something cheaper. It’s about having the discipline to consistently set aside money for an extended period.
Before you graduate, save up for one big thing you’ve always wanted. It could be a graduation trip to Europe, a new computer or even just full payment on your student loans so you can enter the working world debt-free. Come up with a plan to save and/or earn the requisite amount.
If you come out of university having successfully amassed a large amount of money to fulfil a worthy goal, you’ll have a much clearer idea of how to set financial goals and achieve them when you grow up.
It might surprise you, but many of the working adults around me don’t really have financial goals at all. Many are highly educated and working as PMETs, yet they don’t actively manage their money, nor do they know what they’ll do when they’ve saved a large enough amount.
Do the above and you’re less likely to spend the first five to ten years of your working life making stupid financial decisions.
What are the most important money lessons you’ve learnt at university thus far? Tell us in the comments!
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