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How To: Money (Student edition)

Updated: Sep 27, 2021

It is a generally accepted fact that young adults and students are broke and living from paycheck to paycheck. How about we start changing that superstition?


Okay, look, I understand that this topic is boring as fuck for most people.


That's why I'll write this post straight to the point with no bullshitting about ROI, dividends, compound interests and so on, giving you only key info you'll need to get you started when taking care of your personal finances, while actually still enjoying yourself and not cutting back on any Starbucks coffees.


Below is the guide - the key points we're going to cover in this blog:



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1. INCOME

Work, hustle & raise your income.


Income is money that you get in return for working at a job, receiving a monthly scholarship or selling weed.

Our goal is to do more of that. Work more or sell more weed - of course only in countries where it's legal... of course;)


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1.1 Raise Your Income Asap


But really though, there are many ways to raise your income, especially if you're a student - because quite frankly, you have nothing to lose.


The obvious ones are:

  • Get a job.

  • Ask for a pay-raise (only if you think your input and contribution to the company is underrated)

  • Find a job that pays more

  • Learn a new skill that pays well.

The only advice I can give you here is: GO FOR IT.

  • Don't be afraid to talk to your boss about your salary.

  • Don't be afraid to change jobs.

  • Don't be afraid to level up your career.

If you need more guidance on this, check out book recommendations in 3rd chapter.


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1.2 Side Hustles


There is also something called side-hustles. When you finish your job at 4 pm, you still have some hours left until sleep. Those hours can be used either for watching Netflix, scrolling through IG and chilling on the couch, or you could go step forward and start building your wealth with side hustles.


Here are some examples:

  • Become an online tutor

  • Build theme pages on Instagram

  • Amazon FBA

  • Drop-shipping

  • Start a blog or YouTube channel

GO FOR IT.


Suggestions and a real-life example: Track your income with a simple excel sheet. That way you'll be able to track the growth of your income.


Let's say we get a job that pays 1000โ‚ฌ monthly. We'll now see how we can allocate this money with a system inspired by Ramit Sethi.

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2. EXPENSES

No, you probably don't need that.


I can't express this enough - live below your standards. Once your income starts rising, don't let your expenses rise as well.


โ€œIf you will live like no one else, later you can live like no one else.โ€

โ€• Total Money Makeover by Dave Ramsey


One of my friends recently bought the new iPhone for some crazy price. He was working hard and his cash balance grew exponentially as he has no other expenses.


So he decided to treat himself with a new phone, while the previous one worked perfectly fine.


Let's get something absolutely fucking straight - most of the time money controls us, even though we might say we know where our money goes.


Deciding to walk towards a path of financial independence and stability means controlling your own behavior around money. It all starts from seeing through our illusions and impulses to get the "next new best thing".


But then that also raises a new question: "Does that mean I can never treat myself anymore?" ... Fuck no, it's all about planning and saving, which I'll talk about more in chapter 2.4

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2.1 Expenses - Fixed costs


For personal budgeting purposes, fixed expenses are the costs that you can forecast with confidence because they don't change from month to month or period to period. (lease and rental payments, insurance, interest payments,...)


If you're a student you probably don't have as many monthly expenses (phone bill, subscriptions, ...) as someone with a family would have.


That is a big plus for us because that means that we have more money left to allocate towards savings, investing and something called "guilt-free-money", which we'll get to know later.


Suggestions and a real-life example: next to your "income" column in Excel, create a "fixed costs" column. Let's say you earn 1000โ‚ฌ and you have 350โ‚ฌ of fixed costs. That leaves us with 650โ‚ฌ, which we can allocate further.

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2.2 Expenses - Emergency fund

Saving money simply means depositing some amount of money from your regular income so that the saved amount can be used later. It's a future expense.


What I recommend is opening a savings account, where you can withdraw money in an instant. The next phase would be transferring money (even 20โ‚ฌ monthly turns into 1.2k in 5 years) to that account every month, little by little, creating what I call an "emergency fund", which can be used only for life and death situations.


Never take money from the emergency fund, except if absolutely necessary. After all, I did tell you it's all about behaviour, right?


New -70% sale, car registration and insurance are not an emergency, because we should have known that was coming anyway. This emergency fund acts as a "cushion" when everything seems to go wrong in your life - a barrier to stop something called Murphy's law.


Suggestions and a real-life example: Create a "savings - emergency fund" column next to your "fixed costs" column in Excel and plan to put few bucks into it every single month.


We were left with 650โ‚ฌ from the previous chapter, and let's say we put 50โ‚ฌ into the fund, which leaves us with 600โ‚ฌ for our next step.


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2.3 Investing

Investing is the act of allocating money, with the expectation of generating an income or profit.


There are two things that need to be mentioned here:

  • You don't have to know everything about investing, so start today.

  • No, you won't become a millionaire in a year, nor you will lose your money in a year. Well, probably.

I'm not going to bother you with dividends, compound interest and so on - you'll learn that as you go, so just start.


How to start?*

  • My advice is to open up an account on eToro or Trading212 as they're both easy to use with a beginner-friendly user interface.

  • Next, deposit some money. On Trading212 you can start with as little as 1โ‚ฌ. And that's what I recommend doing - invest a small amount, just so you don't procrastinate with investing for another year or so.

  • Invest anywhere (just a small amount of money - you decide how much). You'll think about investing strategies later. Invest in Apple, Tesla, Microsoft or any well-known company.

If you prefer cryptocurrencies, I recommend using Binance.


The whole point of this chapter is just to show you that it isn't hard to start and that you can start with 0 knowledge. Like I did. I don't know why, but I always thought investing wasn't for me, and that I don't have enough knowledge/expertise to even start.


Which is a dumb mindset to have, because I postponed opening up a trading account for another month, another year.

Once I decided just to say "fuck it, imma do it right now" and put 100โ‚ฌ into eToro, in a well-known company. Since then, my interest in investing grew, as I saw that it's really easy to invest. I just needed to understand WHERE to invest. And slowly but surely I educated myself on investing, with the help of something called the internet.


So, just start and educate yourself as you go (of course, don't go overboard with your first investment - start small). You'll thank me later.


Suggestions and a real-life example: If you've been following previous examples, we started with 1000โ‚ฌ and because of fixed costs and emergency fund, we have 600โ‚ฌ left.


What I recommend is investing at least 20% of that (120โ‚ฌ).

I personally invest something from 50%-70% monthly.


Let's say because we're few months into investing already and we're ready to invest 100โ‚ฌ into S&P500, as there is higher diversification (that 100โ‚ฌ will get allocated to 500 largest U.S. companies). Don't worry if that's already too specified to understand. As I said, you'll learn as you go.


That leaves us with 500โ‚ฌ for the good part.


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2.4 Expenses - Savings


In this chapter, we start saving for stuff we want, but don't need for survival, such as a new iPhone, PS5, guitar, new car,...


I never said that we're going to deprive ourselves of stuff we want - but rather, change our behavior around money. Our goal is to control where our money goes, by controlling how we behave around it.


Suggestions and a real-life example: Let's say I want to buy:

  • A new table in December for 100โ‚ฌ, which means putting 35โ‚ฌ aside for the next three months.

  • A new phone in February. That means that I'll have to put some money aside, every month, 200โ‚ฌ for the next 5 months if I want to buy the new iPhone.

  • A new laptop, which I'm planning to buy in July 2022 for 1300โ‚ฌ. That would require saving 130โ‚ฌ monthly for the next 10 months.


Now, if we had 500โ‚ฌ left from the previous chapter, minus the savings for a new table (35โ‚ฌ), a new phone (200โ‚ฌ) and a new laptop (130โ‚ฌ) = that leaves us with 135โ‚ฌ. Now, what do we do with that?


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2.5 Expenses - guilt-free money


If you've been reading all suggestions and examples, you'd know that we started with 1000โ‚ฌ of income and are left with 135โ‚ฌ after costs, savings and investing.


Now, what do we do with that?


Whatever the fuck you want basically. You can spend it on books, courses, drinks, clothes, food, Netflix, Starbucks, hookers... I don't give a fuck, really.


I'd prefer you to put that money into other aspects of personal development such as health, knowledge, skills, and so on. But you do you, as long as you stick to a system that works for you.


At the end of the day - you should enjoy yourself and do what you love to do. And restricting yourself from being happy to save a few bucks is a stupid idea.


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Follow a system, that allows you to set up a financially stable path ahead of you, while still allowing you to grow and enjoy your Life.


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3 EXTRA: Book recommendations








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Hopefully, you learned something from this blog and found the tips useful. I am posting a blog every 2 weeks - if you have any requests about what I should write next, don't hesitate to contact me on my socials :)



IG: @edisbabahmetovic

LinkedIn: Edis Babahmetovic

Facebook: Edis Babahmetovic




*Disclaimer: All information found here, including any ideas, opinions, views, predictions, forecasts, commentaries, suggestions, or stock picks, expressed or implied herein, are for informational, entertainment or educational purposes only and should not be construed as personal investment advice. While the information provided is believed to be accurate, it may include errors or inaccuracies.

I will not and cannot be held liable for any actions you take as a result of anything you read here.


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