Last week I gave some advice to a friend in my class regarding personal finance and money management. Given that quite a few students tend to read my blog I thought I’d share the tips I gave to him with you all.
I tailored the advice to suit my friend’s situation, but the information can most definitely apply to any one looking to better their current financial situation and prepare for their future. So, here are my top 4 tips for better money management and financial prosperity.
- Have specific money goals
In the same way we have career goals, it is important to have financial goals as well. Oftentimes, people think they’re being greedy or selfish if they work towards having a particular income or if they aspire to becoming wealthier, for example. Society has ingrained in our minds the notion that money is bad. In actual fact, money is merely a means and a form of exchange. Greed and selfishness ensues when people choose not to share with others. It’s entirely possible to be wealthy and share with those around you: friends, families, give to charity, support and assist those with less than you, etc.
Remember David Hayman’s speech when we saw him do his one man show at the Tron? Perfect example of a wealthy person who is humble, generous and far from greedy.
That said, identify how much you would need to live conveniently and comfortably day to day. Add up your monthly costs and consider how much you would like to have as pocket money too. You can never really succeed in any field or path if you don’t know what your aims are! Once you’ve identified how much you need to make per month you can immediately begin to work towards realising that objective.
2. Save a little each month
The vast majority of people do not save, and students especially do not realise the merits of saving. When we leave drama school anything can happen and life may take us in a completely different direction to what we had planned. Because of this, it is important to have something saved to help you out in the future.
Another important reason for saving is that it reduces stress levels. Financial worries is one of the biggest stress causers in the western world. Therefore, by saving a little each month not only do you better prepare yourself for the future, you reduce your level of anxiety and uncertainty since you are establishing a safety blanket for your future. Moreover, this is an incredible habit to develop and enforce for the long run as your life goals and aspirations continue to evolve.
A secure amount of money to save would be at least 10% your monthly income. So I believe you said you get £400 a month or something like that..? On the 1st of every month you should have a direct debit that takes 10% of your monthly earnings (£40) to a specific savings account that you do not touch – you are saving for the long run! This account could be a stocks and shares ISA or cash ISA, for example.
You may find that 10% is too much to start with right now and that is entirely ok. You can start with 5% (£20) and work your way up in the next few months to £40. The important thing here is that you are saving regularly and automatically. If you set up an automatic transfer you will not have to think about saving for the rest of the year.
You set up your direct debit once and then the rest is done for you – you have completed all the hard work.
Easy, simple and stress-free.
Using the 10% rule, after one year you would have effortlessly saved £480. That is more than one month’s income and a fantastic safety cushion for the following year.
How great would it feel starting your final year of school knowing that you have prepared yourself financially for post graduation?
3. Identify areas to make savings
This is a big one. A very big one indeed. I’ve had a strict budget since the start of the academic year, however during the first few months I was often going over as I was spending recklessly on nights out, alcohol and other things that I truly didn’t need at the time. I was also cooking a whole new meal (for one person) each day which meant that I was shopping for food and new ingredients every single evening. Having evaluated my constant overspending I knew I had to make some changes.
- Cook in bulk: This has saved me tons of money – around £30 each month. I buy cheap ingredients from Lidl or Tesco, make a very, very large meal, and eat that for the next 2-3 days. On top of this, I also save tons of time each evening because all I have to do is reheat the food in the fridge; I now have the opportunity to engage in other activities such as going to the gym or reading a play. Others might find it boring to each the same meal for 3 days in a row, but for me I have no problems because I ensure the food is delicious, healthy and flavoursome.
I know that you live at home so you should definitely consider bringing in leftovers from the night before and heating that up in school using the microwaves available.
Let’s consider the cost of a your typical lunch – which is a sandwich bought either from the sandwich shop, Tesco or Subway. The cost of that is between £3-4 per day. In one week that is £15-£20 spent on food for lunch.
If you choose to only bring in leftovers for lunch or if make food at home in advance you would save at least £60 each month.
£15 x 4 weeks = £60
And you could even be hitting £80 if you were really disciplined.
£20 x 4 weeks = £80
All you would have to do is pack the leftovers just as you finish your dinner or ask a parent to put something aside for you after having cooked the family’s evening meal. Therefore, your food will be ready for you in the morning and all you’d have to do is pack it in your bag. Simple, fast, effective.
- Pre-drink only: This is a big one too. Drinks in a bar or club can be excessively expensive thus you should refrain from splurging and flashing the cash (because you aint a rapper, son!). Try sticking to drinking cheaper drinks with friends before going out on the town.
- Refrain from nights out : This is a big ask and not everyone is interested in doing this. You already do this so I won’t say too much more. But when you decide not to go out to clubs or bars consider how much you would have spent on that night out and reward yourself for your efforts.
Let’s say on a typical night out you would spent maybe £5 on beers for pre-drinks, £3 for club entry and maybe £10 on drinks in the club. If you choose not to go out one weekend you would be saving around £18, the equivalent of a week’s lunch.
With this additional saving you could top up your total monthly savings by adding half of this amount to it. So you would half £18 and add £9 to your month savings account. If you were sticking to the 10% rule you would have saved £49 during that month. Again, simple, fast and effective.
4. Be positive about your financial situation.
‘I don’t have money’, ‘I’m so broke right now’ and ‘I wish I could but I’m skint at the moment’ are all commonalities in drama school and among students in university. I understand that the average student isn’t loaded, and more often than not they’re in a tight situation with seemingly endless bills to pay, fees and other educational costs.
However, speaking about your financial situation with negativity will engender more negativity and hardship into your life.
Imagine if I went around saying “Oh God, I can’t act. I’m so shit!” How limiting do you think that would be for my artistic growth and development? With such a destructive outlook I would actively be preparing myself for failure at every single step. I would expect to flop in every class and I would repel all opportunities for learning, self-improvement and better understanding of my craft.
And this idea relates to all aspects of your life. If you think negatively you attractive negativity. Fact. And worse of all, you disempower yourself because you begin to believe that this is the way things are and that this is the way they will always be. Well, let me tell you now that that is never the case!
Every single day we have the power to change our current circumstances, and it’s only with positivity and determination that this can happen.
With a positive mindset you will be able to identify simple changes that you can adopt that will help to increase your wealth, some of which have been outlined above. With a negative mindset you’d probably just feel depressed and do nothing at all, continuing down the same path that you’ve always known.
Stop speaking negatively about your finances and your life so that you can begin to encounter greater opportunities for self-improvement, growth and fulfilment.
Above all, this mindset will make you feel much happier in the long run.