A godly approach to starting good financial habits
The government’s controversial raising of student tuition fees will put increased on the finances for students. Here is some solid advice.
In recent years the costs associated with higher education have increased, while the burden of paying those costs has shifted significantly towards the student. Many are leaving university with a debt burden at the point they are seeking work, considering investing in a property or wanting to save for other long-term goals. Many potential students are wondering if it’s worth going at all.
But don’t be discouraged. You can’t do anything about your tuition fees; they are a fixed cost of the institution you have chosen. But it is possible to assume a godly approach to the management of your living costs, to take steps to minimise your potential debt burden upon leaving university and to establish good money habits that will last a lifetime. At a time in life when your resources are limited, entrust your finances into God’s hands.
In ancient Israel, debt was associated with survival and a way for God’s people to assist the poor (Deuteronomy 15), but, in our society today, debt is seen simply as a way of having what we want when we want it, without having to save for it. Debt is not a sin, but the Bible often associates debt with a lack of wisdom (Proverbs 11.15, 12.9, 13.7, 17.16, 17.18, 22.7, 22.26-27). How we approach debt is a matter of the heart.
If we intentionally mount up debts with no intention of repaying them, then as God’s people, we have a heart issue. Instead, we should accept that God is the ultimate provider of all things, and we should intend to pay back any loans as soon as possible. As Jesus said, where your treasure is, there your heart is also (Matthew 6.21).
A good framework for approaching our finances is encapsulated in the Five Principles for Godly Money Management (from http://www.themoneyrevolution.net/):
* All that we have comes from God
* Be active in your stewardship
* Live within your resources
* Build up treasure in heaven
* Give generously
These principles are backed by the Word of God (Psalm 24.1, Luke 14.28, Philippians 4.11-13, Matthew 6.19-21, Malachi 3.10). Money is the subject of nearly half of the parables Jesus told (Luke 12.15, Matthew 6.19-21, Matthew 6.24), so how we manage our money is so important to Jesus that any notion of such verses not applying to ‘poor students’ can be quickly dispatched (see Mark 12.41-45).
Having made the decision to establish a godly attitude towards your money, there are several practical steps you can take. How you learn to manage your money at this stage of life will stick with you for the rest of your life, and good habits practised at university will continue beyond it (Proverbs 22.6). Here are ten top tips for managing your finances at university.
Top Tip 1: Submit your money to God
Remember that everything you have comes from God (Psalm 24.1), and remember to pray regularly for guidance and wisdom in how you use it (Matthew 25.14-28). As you show obedience in the area of money management, God will instruct, guide and provide for you.
Top Tip 2: Have a budget worked out
Luke 14.28 says: ‘Suppose one of you wants to build a tower. Will he first not sit down and estimate the cost to see if he has enough money to complete it?’
Whether you have already started your study or not, take the time to sit down and work out your income and expenditure. If this sounds scary, then take heart. There are many resources available to assist you in this:
* A local church money ministry (which may have a Personal Budget Coaching team)
* The Stewardship website — http://www.stewardship.org.uk (a leading UK Christian money charity)
* Online Budget Builders, such as those found at http://budgetbuilder.stewardship.org.uk or http://www.thisismoney.co.uk/student-budget-calculator
* Other websites with guidance for students and sample budget spreadsheets, such as: http://www.creditaction.org.uk
Here are some guidelines for building a budget. Work out your income and your expenditure, being as thorough as possible. Include the non-optional outgoings (rent, food, utilities, clothing, university expenses, books and resources, telephone, etc.) and optional outgoings (car, magazines, eating out / drinking, coffees, gym, presents, holidays / outings, etc.). You should also ensure that you understand what benefits and taxes are applicable to you, if any (your local Citizns Advice Bureau can advise).
If your budget does not balance, don’t give up — analyse it. Work out how you might be able to reduce your expenditure, shop around for the best deals and don’t get what you don’t need. Assess all your outgoings one by one. Carefully consider the ‘budget killers’ (eating out, drinking and partying, running a car), and be willing to give them up entirely or minimise them.
Top Tip 3: Work out where your money is going
Taking time to work out where you spend your money can greatly help, but it can also be quite a shock. One way to do this is to track your spending with cards, cash, cheque book or online for a week and write everything down. There are spreadsheets to help you with such an exercise at the previously mentioned websites. Identifying areas of expenditure in which you could cut back will assist greatly in getting your budget to balance.
Top Tip 4: Live within your means
The Micawber Principle from David Copperfield (Dickens) states: ‘Annual income twenty pounds, annual expenditure nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery’.
This principle is based on basic maths and yet is hard to put into practice. One practical thing you can do is to build a budget that matches your preferred result!
Surviving university financially requires a mindset of ‘short-term pain, long-term gain’. You cannot expect the standard of living that you were used to at home. At university, there will be those who have more money than you, and others with less who still appear to have more money than you (see Proverbs 13.7). Being content with what you have is fundamental to living within your means and, if you can develop this contentment at university, it will prepare you for later life.
Top Tip 5: Avoid credit and store cardsM
Plastic cards are one of the quickest ways to get into serious financial trouble. If you already have credit card debts, try to pay these off before other debts. Otherwise, stick to debit card products and an arranged overdraft (if absolutely necessary). There are many good deals for students with the major banks.
Top Tip 6: Remember the Latte Factor
The little things add up. This can be illustrated well with the Latte Factor concept:
* A Latte a day = £2.00
* A Latte a day for a month = £60.00
* A Latte a day for a term = £180.00
* A Latte a day for an academic year = £540
‘But it’s only a couple of quid a day…!’
You need to factor in some other Latte Factor items (e.g. buying lunches, having an extra pint, driving to town instead of walking) and you will have discovered one of the primary reasons why your student bank account is empty!
Top Tip 7: Actively manage your money
The usual term for this is stewardship. Your goal should be to regularly review how you are doing against your budget. Keep receipts and log them, or carefully review your expenditure online. Online and desktop tools may help, e.g. Wesabe, BankTree, Quicken (there are several others, some of them free).
Top Tip 8: Don’t be an ostrich!
This cannot be stressed enough. If you get into debt, don’t bury your head in the sand! Avoiding debt problems makes them worse, often exponentially. Do not let your shame or guilt prevent you from taking the right course of action. Help is available from many sources (local churches, CABs, Christians Against Poverty, CCCS, other debt advice centres).
Top Tip 9: Get a job!
Consider getting a small job to supplement your other funding sources.
NOTE: This option depends on the type of course you are on, and must not interfere with your ability to do your coursework.
A few hours a week at a part-time job can make a huge difference to your financial health. Alternative use of such time on activities like clubbing / eating out will give you exactly the return on your investment that you should expect!
Top Tip 10: Give generously
God’s Word speaks clearly about why and how we should give. Some key verses are Matthew 25, Proverbs 3.9-10 and Luke 6.38. In Malachi 3.10, God promises that he will bless you if you give the first fruits of your labours back to him.
Your giving should be driven by a response of obedience and thankfulness for everything that God has already given to you. God promises to bless you and provide for you when you give, and he remembers your giving (it’s one of your treasures being stored in heaven).
It is hard to give much when you are at university, so don’t feel obliged to tithe. Instead, work out what is sensible and affordable using your budget calculations. What you give and how you give is again a heart issue (2 Corinthians 9.7). If you give with a cheerful heart, your bank account in heaven will be in credit! (Philippians 4.15-19). If you take a godly and wise approach to managing your money while at university, perhaps your bank account on earth will also be in credit!