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Being a student and living under the protection of your parents is all fun up to a certain age. However, over time, asking money from parents for your hobbies, interests, and day-to-day activities might feel uneasy and burdensome.
So, how can one stay out of a position like that in life? We are here to help you. In this article, we will discuss how to be financially independent as a student.
Whether you are a student or a grown-up individual, financial freedom is essential, as it provides freedom of choice and the power to decide what to do and what not to do in life. Interestingly, the Gen Z population is showing more interest towards financial literacy, budgeting, and early investing.
So, let us get into the depths and learn how to be financially stable as a student.
Financial freedom for students means the ability to manage the daily expenses, including studies, bills, food, accommodation, transportation, student loans, and more, independently. However, along with meeting bills, it is also about managing expenses, saving money, and at times investing for future needs.
Is achieving this financial independence easy for students? The answer might be no. With limited income opportunities, academic pressure, and increasing living expenses, students might struggle to find a balance in the beginning.
Despite the challenges, achieving financial independence as early as possible has a long-term benefit to offer. So, by practicing budgeting methods like the 50/30/20 rule and other strategies, slowly but gradually, students can lead a life without financially depending on their parents.
Not only does this make them more free, but it also teaches life skills like budgeting, avoiding unnecessary expenses, handling real-life responsibilities, and more.
As we have already discussed, becoming financially independent from your parents can feel like a Herculean task in the beginning. However, with small steps and constant efforts, you can make a big leap in the long run.
In this section, we will discuss it in depth. Let’s start by broadening our discussion to include the potential steps you can adopt to become a financially independent student.
The first and foremost step in becoming a financially stable individual is building smart money habits. You can reach your financial objectives more quickly if you develop better money management practices early in life.
Here are some basic things you can focus on to develop better financial management skills.
Proper budgeting has a prime role in making people financially aware and independent. Utilising money and categorising it into needs and wants are important life skills every student should develop, even if they haven’t started earning.
There are various budgeting techniques, like the 50/30/20 rule, that can aid in better financial management. According to this rule, 50% of the earnings or money should be allocated to the needs or essentials for day-to-day existence.
From the remaining 50%, 30% should be allocated for wants such as entertainment, shopping, hobbies, and more, while the last 20% should be contributed to savings.
Although the 50/30/20 rule is one of the easiest to follow budgeting plans, students might face difficulty in following it due to limited income. In such cases, you can adjust it according to your needs and change the pattern into 60/30/10, 70/20/10, or likewise.
However, always remember to make realistic budget plans and stick to them. You can use budgeting calculators to plan and visualise weekly and monthly expenses and develop effective budgets.
Along with setting a realistic budget plan, it is important to analyse where and how you spend your money. Take note of all expenses and savings every week and evaluate daily spending, as it helps to identify unnecessary expenses and plan spending accordingly.
You can track your expenses by taking notes, jotting them in your phone, or using expense tracking apps like YNAB, PocketGuard, Goodbudget, and a spending and budgeting tool.
Finding a source of income, no matter how small or big, is important to become a financially independent student. There are various income sources that are suitable for students.
Let us have a quick look at some popular income sources beneficial for students.
Students taking up part-time jobs is a common practice seen worldwide. From simple positions as administrative assistants to occupations in cafes and libraries. These jobs are mostly flexible, helping students to balance both studies and work.
Even if the earnings from part-time work cannot contribute much to savings, they will definitely help students meet their basic needs and daily expenses.
Paid internships are one of the best ways to earn while continuing your studies. You can find short-term and long-term internships that align with your educational qualifications.
Internships have multiple benefits. Along with offering a source of income, these internships also help gain professional experience for the future.
However, not all internships are paid. There are unpaid internships as well. Some unpaid internships might offer stipends to cover travel and food expenses. But in some countries, unpaid internships may even be restricted or regulated by labour laws, so always check your local rules.
Students can find various on-campus jobs like that as a research assistant, teaching assistant, helpdesk assistant in the Students’ Union, and more.
As these jobs are on the campuses, students will be able to easily manage their classes and schedules with the work if they choose on-campus jobs.
Plenty of freelancing and online jobs are available today. Taking up these jobs will be helpful for students, as they can work depending on their availability and convenience.
With a wide range of jobs like writing, tutoring, designing, and more, you can convert both your passion as well as profession into freelance jobs.
However, not all freelance or online jobs can be done at your convenience. Some of them might have time constraints. So, select those jobs that are convenient and manageable according to your classes.
You can find these jobs from career and placement cells and platforms like LinkedIn, Indeed, Fiverr, Upwork and others. But always stay updated with continuous CV checks, attend mock interviews, and seek career advice from experts and accredited life coaches, as it will help improve your job hunt and overall living.
Apart from jobs and internships, students can make income from passive sources like blogging, YouTube, print-on-demand designs, and more. Similarly, small businesses like handmade crafts and thrift stores can also be a good side hustle for students.
Reminder: Students can better understand where their money is going and increase their savings by keeping a basic cash flow system and monitoring their income and expenses.
Student-specific scholarships are another major source of income during student life. You can find various scholarships to uplift certain communities, offer financial resources based on merit, and more. These scholarships help reduce student debts, support economic needs, and improve student performance.
Earning alone will not help you become financially independent. Along with it, you should also cut down on unnecessary expenses and start saving money for your future needs and emergencies.
Here are some methods and facilities that help students cut down their living costs without lowering their quality of life.
Student discounts are one of the most beneficial things that help reduce their living costs. Many services, including essentials like transportation and entertainment, such as Spotify, Amazon, Adobe, and more, often come with student discounts of 10% to 50%.
Students can cut short their expenses by reducing spending on food.Consider cooking at home rather than ordering takeaway. This helps save a large amount of expense. Moreover, practice meal prepping on weekends, as it helps make things easier, even on busy days.
Instead of living alone, sharing housing space with roommates will help reduce accommodation costs, as you will be able to split expenses.
Another method that helps reduce housing costs is opting for on-campus accommodation. Not only is it more affordable compared to other accommodation options, but it also cuts short transportation costs.
Minor changes in lifestyles and shopping will also help students cut their expenses. Instead of recharging various entertainment streams, look for offers that are included with your phone plan. Also, look for student bundles or family plans that reduce costs.
Another important thing is to reduce impulsive shopping. Always ensure that you really need the thing before buying it. Establish a 24-hour waiting period before buying something. This will help you identify whether it is a need or emotional buying.
Starting savings, even in small amounts, will be the foundation for future savings. So, students can also have savings plans like:
Many banks offer special student-friendly accounts, often with zero balance or with reduced fees, though this varies by institution.
However, before starting a bank account, ensure that you check all the terms and conditions. Additionally, even though some banks may offer special student-friendly benefits such as zero-balance accounts or fee waivers, this is not guaranteed by all banks and financial institutions.
Develop an automated savings scheme. That means setting up a system where a percentage of your earnings, student scholarships, or stipends is automatically transferred to a savings system.
No matter how small your savings are, follow this practice, as it helps develop discipline and saving habits in students.
A sudden and unexpected expense like a medical emergency, laptop repair, or unplanned travel can break the financial balance of students. So, save up for such emergencies by maintaining an emergency fund.
Initially, you might only be able to save up small amounts. However, save more when possible. Ensure that you have at least one month’s living costs saved up in your emergency fund.
Debts are a reality of student life. It might be difficult for most students to manage these debts alone. However, proper planning and responsible decision-making will help students manage their debts wisely.
You might need student loans for your higher education. However, borrow only what you need. As loan repayments can be a hectic task, ensure that you do not take maximum loans if not necessary.
Additionally, look into your options for repayment and see if you may start with interest-only payments. Students can explore loan consolidation, income-based repayment plans, or use simulators like Federal Student Aid’s loan calculator by the US Department of Education to plan repayments effectively
Students can apply for credit cards with modest limitations from some financial organisations. You can use these resources to raise your credit score. To prevent interest, make sure you can pay back the loan on time.
Keep in mind that utilising credit cards improperly can result in rapid debt traps. So, use them only if you are confident about timely repayments. Moreover, the laws regarding the credit card issuing for students might differ in different countries.
So, analyse them well in advance, as some countries offer credit cards for students only if they have an income source or a co-signer.
Pay off bills and utility fees like water, electricity, WiFi, and others without fail. Late payments can lead to high interest.
You can consider setting reminders to pay off bills on time and setting up automatic payment options to manage.
Along with handling debts wisely, it is also important to stay away from debt traps. You might come across payday loans and fast lending applications that may provide loans with less hassle. However, they come with higher interest rates.
Although these loans might be tempting, ensure that you do not fall for them.
Students usually consider investments as a grown-up man’s thing. However, by taking advantage of compound interest, early investing can aid in achieving financial independence. But remember, proper financial knowledge and guidance are required to start an investment.
Some popular forms of investments, like the stock market, crypto, and forex trading, might seem to offer huge profits within a short time. However, do not invest to chase profits. Instead, learn about the basics of investing from expert financial advisors.
Crypto and forex are high-risk investments. So, as beginners, choosing low-risk investment plans like mutual funds, index funds, and SIPs will be better for students.
Moreover, the availability and legality of crypto and forex trading vary greatly from region to region, especially in the case of students. So, researching the legalities of your investments before making a final decision is important.
Alongside, students should also consider having basic insurance, like health insurance. These insurances are important, as they help secure our savings and financial stability in times of emergencies. So, even if you encounter a medical emergency in the future, you can take care of it without breaking your savings.
You can consider taking certification courses, attending webinars, and enrolling in online courses offered by platforms like FinQuo Versity. This will help you understand the market and make informed decisions, reducing potential losses.
Balancing studies and financial responsibilities can be challenging. However, with the right approach and proper planning, you can succeed in both these areas.
Money is important in our lives. However, more than just making enough money to meet daily expenses, becoming financially independent from your parents early in life offers students several other benefits. Some of them are:
Learning how to be financially independent as a student is far more than just learning how to meet daily expenses. As we have already discussed in this blog, becoming financially independent is also about learning to meet expenses, saving money for future needs, cutting short unnecessary expenses, and understanding investing.
With part-time jobs, internships, passive income, and on-campus work, students can reduce their dependence on parents and eventually gain freedom of choice. However, along with developing financial freedom, it is important to prioritise education as well as physical and mental well-being.
So, with proper planning, guidance from financial experts and life coaches, and various trial-and-error methods, students can experiment with different methods that help them become financially independent early in their student life.
Uma Nair is a professional content writer with over 3 years of experience and a strong foundation in crafting engaging and informative content across diverse domains. Over the years, she has dealt with various niches, and her growing interest in finance has led her to explore the world of financial writing. As an English Language and Literature postgraduate, her educational background supports her ability to convey complex topics in easy and accessible content. In her free time, she stays updated on industry trends to continually enhance the value of her content.
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Ibnujala is a seasoned financial expert of Indian and Middle Eastern markets with an experience of over 15 years. His deep interest in neuroscience fuels his research in seamlessly blending finance and science. With a bachelor’s degree in law from India and an MBA from the UK, his diverse academic background makes him an expert in financial management and mentorship. In addition to being a seasoned investor and serial entrepreneur, he currently serves as the CEO of Finquo Versity.
Disclaimer: The information provided in this blog is for educational and informational purposes only and should not be considered as financial or investment advice. Stock market investments are subject to market risks, and past performance is not indicative of future results. Readers are encouraged to do their own research and consult with a licensed financial advisor before making any investment decisions. The author and publisher are not liable for any financial losses or damages incurred from following the information provided in this blog.
Uma Nair
