99 Barriers to Student’s Financial Freedom
Introduction: A student’s financial freedom is very important. Managing money is an essential skill for students, especially for the international ones, living far away from their homes. Since they are studying, students often have to go out of their way to make sure they are financially free and not a burden to anyone.
This article aims to put forward some of the barriers that a student faces on the path to financial freedom. Besides, here we also present some of the ways that you can use to ensure financial freedom during your student life.
- High Tuition Fees: This goes without saying. High tuition fees and other expenses around the world constitute to form one of the biggest barriers to students’ financial freedom. These huge expenses lead to loans and the loans lead to huge instalments.
- Poor Budgeting: It is really important for students to jot down their expenses and compare them to their net budget. That is the first step towards their financial freedom.
- Unplanned expenses: After budgeting, students should plan the expenses accordingly. Experts say that a healthy student’s expense should not be more than 85 percent of his total budget to ensure minimum savings for future use or emergency.
- Inability to save money: Students need to put some part of their budget into future savings in order to invest or pay for emergency events just in case.
- Poorly structured expenses: In order to aim for a realistic outcome in terms of financial freedom, students have to follow some structure. One of the ways to do so is to follow the 50-30-20 rule. The rule states that 50 percent of their expenses should be made to purchase all the necessities, 30 percent should be paid to meet the student’s wants and the rest 20 percent must go to savings. This is by far the most effective model to become financially free and is suggested by every economic expert.
- Lack of scholarships: Students should opt for fields and colleges offering scholarships in various categories. That way, they’ll save a lot of debt going into student life.
- Lack of awareness about student benefits: More often than not, students remain unaware about the benefits that their student status bestows on them.There are several banks and universities which offer students benefits like low-interest loans and special student grants. Students should research these before opting for any course which is a high cost in nature.
- Ineffective debt use: Students should study various kinds of debts and choose wisely the most effective debt plan suitable for their financial status.
- Use credit cards: Spending money with credit cards helps to build up the students’ credit score, which helps to secure future loans at very low-interest rates.
- Live within a limit: This means, to live within your own financial boundaries. If you tend to spend all or more than what you can afford you’ll always end up in some form of debt, which is not good for achieving financial freedom.
- Failing to plan debt payments on time: This point is often overlooked by students. Students should always plan ahead of time for their monthly debt payments, otherwise, their credit score will get affected which is not good for their future finances.
- Relationship with money: Building a good relationship with money will keep students off debt, help them maintain a good credit score, and take them towards becoming financially free.
- Knowing one’s current financial status: Students come from all different financial backgrounds. Therefore, they need to firstly acknowledge and realize their current financial situation and plan accordingly.
- Calculate expected income: Calculations for expected income can help students select their future jobs or internships based on their current financial situation.
- Create suitable accounts: Creating high yield savings accounts designed for students in many countries is essential for achieving financial freedom at a young age.
- Settling up a regular deposit scheme: Many student accounts require students to pay monthly, which goes towards their own budget and savings. This must be done at regular times to ensure consistency, so that, by the time the student graduates, there will be enough money.
- Paying loan interests in advance: Many student loans have an option to pay the interest amounts monthly in advance. That way, the student will have to pay lesser interest rates than usual, and also, they don’t have to worry about paying a lump sum amount of interest at the end.
- Failing to monitor the credit score: Every student should monitor his own credit score in order to ensure that they are not behind their loan payments or monthly installments.
- Not trying to achieve a higher credit score: Trying to achieve a higher credit score will result in students having to pay lower interest rates and get more future loan benefits.
- Getting a part-time job: Even while studying, students should opt for part-time jobs to get some sort of income coming into their bank accounts.
- Freelancing: Students can also freelance and sell their services in their desired time to make some money while they are studying.
- Reselling: Students can buy used products and resell them on Craigslist or eBay to make some money on the side.
- Internships: If a student is too busy to get a part-time job, then internships might help considering they are less time-consuming and some of them are as high paying as a part-time job.
- Assignment writing: This is another way to get money on the side by writing other students’ assignments.
- Medical insurance: Making medical insurance is vital to ensure that the student is not bombarded with bills if he has any medical emergency in the future.
- A realistic approach to finances: Instead of daydreaming, students should have a realistic view and plan of their finances and the future they want.
- Planning your dreams: This is also a very important aspect towards attaining financial freedom because different students have different aims and objectives and so, they should plan differently for different dreams.
- Having a financial advisor: If they can afford even for a few months, students should have a financial advisor to guide them through the initial process of finding out how can they attain financial freedom.
- Doing a finance course: If they can’t afford a financial advisor, then the students must do some low-cost or even free finance courses to gain a better insight into the world of finances.
- Spending effectively: One of the major ways to save more at least in student life is to spend effectively to maximize the savings. This will result in the students having more savings compared to their peers and thus, will boost them towards financial freedom.
- Track the expenses: One other aspect of spending effectively is tracking the expenses. This is also important to plan a realistic savings plan for the future.
- Make a savings plan: It is not ideal to just save money randomly without any planning. Students must plan out extensively how can they maximize their savings and minimize the expenses without sacrificing their quality of life.
- Using expense calculating apps: Apps like Mint and Marcus calculate your expenses and list your possible saving ideas for you for free. It is a great place to start for students with little to no financial knowledge.
- Maintain lifestyle: For a student, it is very important to maintain a financially reasonable lifestyle so that, they don’t throw themselves into unnecessary loans and credit card bills.
- Trimming down the overall budget: By trimming down the budget, a student can save much more due to forcing themselves to spend lesser money on unnecessary things.
- Create a yearly financial plan: Creating a yearly financial plan will help students to save over a long period of time while also giving them options to see their expenses and savings pattern over time.
- Minimize liabilities: Students need to minimize liabilities at this stage of their lives to become financially free in the future.
- Maximize assets: Students should focus on maximizing their assets in order to become financially successful early in their lives.
- Pay off debt installments within time: This is also an important part of building a good credit score and taking a step towards financial freedom for students.
- Make a payoff plan for debts: Students who are paying off loans need to create a financially sound plan to pay off the debt in the given time frame with minimal damage to their student lifestyle.
- Become debt-free as soon as possible: Becoming debt-free quicker will lead to more financial options opening up for students.
- Giving tuition’s: Giving tuition’s can be very helpful for students who do not have a job or can’t find an internship.
- Building a good emergency fund: Students have a whole life ahead of them and so, it would be wise for them to build themselves a good emergency fund by maximizing their savings.
- Career evaluation: Students need to evaluate their career options very seriously because choosing the right job can mean attaining financial freedom quicker than others.
- Job benefits: Students should choose a job not only based on the pay but also the work benefits the job is offering, like provident funds and medical insurance.
- Invest in retirement fund: Students must be thinking way ahead in terms of being financially free even after their retirement and so, they must take into consideration planning for their retirement fund from now on.
- Stick to your financial plan: After making your plan, you need to trust it and stick to it for a long time to see the results.
- Apply for remote jobs: Work from campus or remote jobs are the best way for students to earn money while they learn and save time in the process.
- Transportation: Saving on transport will be a key factor in the monthly budget savings of a student. In order to do this, the student must stay in a cheap dorm or rented apartment.
- Renting out: The student can rent out his or her room so that the roommate plays half or one-third of the rent of the room. This will save a huge chunk of money from the student expenses.
- Traveling cost: Next is controlling the traveling costs of a student. A student must avail only public transport to save the maximum amount of money on transportation.
- Invest: In order to gain financial freedom at an early age, the student must invest their savings in some sort of income-generating plans like the stock market or mutual funds, so that the money invested generates even more money rather than staying idle.
- Stock market investments: The students can invest in the stock market to generate passive revenue for their invested amount. They can pay a lump sum amount or invest according to their needs at regular intervals.
- Mutual funds: This is by far the safest option, as most students do not have the adequate knowledge of the stock market to invest wisely. Mutual funds allow experts to invest on behalf of the student so that, the investment brings maximum returns.
- Invest in real estate: The most profitable investment is to invest in the real estate industry.
- Invest in bonds: At advanced stages, students can invest in bonds to get high-value returns.
- Prepare a life plan:Students have to look forward and plan ahead. They need to be clear about their lives and how they aim to distribute their money.
- Not looking at the long run: A lack of foresight into future can affect a student’s financial status significantly.
- Understanding financial management:Students have to have an understanding of finances and their management. For this, they need a financial advisor to guide them through.
- Distribution of finances: Students have to distribute their money to various parts of their lives according to their life aims.
- Paying off credit card bills in whole: Students should pay the credit card bills in full to ensure the best possible credit score and lower interest rates.
- Start investments early: Student life is the perfect time to start the investment work as it will pay off later.
- Stuck in a cycle of bills: When a student leads a lifestyle that involves fixed bills every month, that too, of considerable amounts, it leads to financial imbalance.
- Continuous education: Educate yourself constantly to keep yourself updated regarding the latest financial benefits.
- Proper maintenance: Proper maintenance of your finances is very essential for attaining financial freedom.
- Review tax laws: Review tax laws to save as much money as possible. Sometimes people pay more taxes than they should due to a lack of education.
- Living below one’s means: The student life is the perfect time to live below the means of the student and compromise a little bit, so that, the students can save more money, then invest it in mutual funds and get benefits from it later in their lives!
- Become a minimalist: Students should try living a minimalist lifestyle with no parties and no extra spending. That will help them to develop self-discipline and attain financial freedom.
- Self-discipline: As discussed, self-discipline is a must to make the expenses lesser and the income greater.
- Opting for health benefits: Many states and jobs give health benefits. Students should pick those jobs to save money on health, which costs over 50 percent of the total expenditure at advanced ages.
- Develop healthy money-making habits: Habits such as investing regularly, making multiple insurances help the student to make a strong financial base and contribute to gaining financial freedom in the future.
- Set small goals: Small but realistic goals build up over time to make the student financially stronger.
- Invest in PF: Investing in the provident fund is so good for the future and also helps after retirement.
- Early retirement: It has been noted that people who aim for an early retirement tend to be more focused on their spending than others.
- 50 percent saving rule: This is an extreme version of the 50-30-20 rule, but it will greatly help the students in the long run.
- Do tax reductions: Many employers will deduct an amount from the CTC making it fall within a lower tax bracket. Students should opt for those types of jobs.
- Multiple sources of income: This is really important. All throughout life, the student must maintain several sources of income for maximum financial stability.
- Positive outlook towards money: Mentality towards money comes first. The student must develop a positive mindset when it comes to money.
- Splitting your goals: Splitting down your goals will help clarify your aims and manage your money better.
- Getting rid of unused products: Currently, selling off second-hand products is the biggest source of income among students in America. It is time-saving and also pays very well.
- Paying off debt first: Paying off any sort of debt should be the first priority of any student. If you are in debt you cannot be financially free.
- Predict incoming liabilities: Students should predict major liabilities like future loans, buying houses, etc. so that they can prepare for it and save money according to the future liabilities.
- Dropshipping: Dropshipping is the second most important income source for students after reselling. Sites like Amazon are very reliable for dropshipping.
- Buy experiences and not things: It is really important to understand that you should invest in yourself by buying experiences that enrich you rather than buying things to impress others, which does not mean anything, but more liability for you.
- Buy lesser every year: This is another basic way of saving expenses, but it is gradual as it makes expenses lesser each year and saves more every year.
- Stop eating out: Students are the largest population that eats out. Eating out instead of cooking destroys your finances and makes you pay more for the same food that you can cook.
- Stop party life: In order to save maximum, students need to quit partying and party lifestyle as it wastes much more money than anyone can imagine!
- Add one source of income every year: This will ensure that your finances are well diversified and you do not lose money once one of them crashes down.
- Future expenses: Plan several ways to manage your future expenses and think about maximizing your future savings.
- Do not commit impulsive purchases: Impulsive purchases are purchases that you commit due to sudden social or other impulses. Students should always avoid purchasing anything that does not have meaning for their future.
- Curb unplanned expenditure: Students need to curb unplanned expenditures in order to gain financial stability.
- Opt for only student-friendly colleges: Some colleges are student-friendly and offer various ways of cutting student fees. Students should always opt for those colleges.
- Opt for discounts: Various services like buses, trains, and libraries offer discounts to students. Opt for those discounts to minimize expenses.
- Increase investment amounts: Students should gradually increase investment amounts as they become more and more financially stable in order to get maximum benefits from the investments in the future.
- Avoid risky investments: Many investments have market risks attached to them. Students should avoid these types of investments so that, they do not fall into the trap of the market.
- Plan retirement afterlife: For best results, one should plan ahead of time for the life and expenditures aster retirement.
- Inflation: Students should also take into account inflation rates while making future expenditure and savings plans.
- Invest safely at first: Since they are just starting out, so the students should invest in the safest option possible even if they do not have as high returns as others.
- Start as early as possible: Compounding makes investments that start earliest the most rewarding ones. Therefore, students should start investing their money as soon as possible. By investing earlier, students will also have the time necessary to get habituated to the art of investments.
