What I Wish I Knew About Finances at University

Joining university is an exciting journey. One that is marked by newfound freedom and endless possibilities. However, amidst the excitement of classes, friendships, and campus life, finances are a crucial aspect that often gets overlooked. Looking back five years ago there are several financial lessons I wish I had known during my university years. 

These insights could have saved me from unnecessary stress and set me on a more secure financial path. Here are nine lessons I wish I had understood better:

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1. Budgeting is a Lifesaver

Before joining campus, I wish I had grasped the importance of budgeting. It’s a fundamental skill that not only helps you manage your expenses but also enables you to make informed financial decisions. Back then, I had a vague notion of budgeting as something adults did, but I didn’t fully appreciate its significance until later. 

I recall when I received my first HELB loan disbursement; it felt like I had won a small fortune. However, without a budget, I spent recklessly on clothing, dining out, leisure activities, and even purchased a phone. By mid-semester, I found myself struggling to cover essential expenses such as transportation, food, academic materials like photocopies, and other necessities. I often relied on friends, family, and sometimes even missed classes and lunch. Fortunately, I was living in a hostel, which provided some stability. 

Without a budget, it’s easy to overspend and find yourself in financial challenges like mine. A budget helps you allocate funds for various needs, whether it’s rent, books, transportation, or entertainment. 

Creating a budget involves tracking your income and expenses, setting financial goals, and sticking to a spending plan. It might seem daunting at first, but there are many apps and online tools available today that can simplify the process. By following a budget, I could have avoided the anxiety of wondering if I'd have enough money for essentials each month. 

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2. Student Loans are not Free Money

Student loans are, unfortunately, a necessary part of the university experience for many of us. However, I wish I had fully comprehended the long-term impact they would have on my finances.

As soon as I graduated, the reality of repaying my student loans set in. I started receiving reminders to begin paying my loans and I also realized that the substantial sum I had borrowed would take years to pay off, affecting my ability to save or invest for my future.

Moreover, student loans can influence your financial decisions even after graduation. For example, having outstanding student loans can hinder your eligibility for other loans, as some banks or SACCOs require borrowers not to have any outstanding loans. Additionally, some student loans come with high interest rates and demanding repayment terms. 

In my college days, I observed that some of my college classmates applied for HELB and other student loans not out of genuine necessity but because they thought it was a customary practice, believing that every student should apply to have a cash supply. 

The allure of receiving financial aid in the form of loans often seems like a lifeline, a way to meet expenses and enjoy college life. Nevertheless, these loans come with the responsibility of repayment.

If I had approached student loans more cautiously, I might have explored alternative ways to fund my education, such as scholarships, grants, or part-time work, to reduce my reliance on loans and the burden of debt they carried.

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3. Part-time Jobs and Freelancing Can Make a Difference

I remember my class representative. He worked as an online writer as a part-time job and even had his own studio apartment equipped with appliances like a fridge, microwave, cooker, and a big-screen TV. He comfortably paid his rent, all from his online writing job. I often thought he was too serious with life since campus life should be about having fun, exploring, and hanging out with friends and classmates. After all, school already felt like a lot of work, so why would he choose to work even more?

Then one semester, the lecturers went on strike, and I decided to stay in the school hostel instead of going upcountry. Suddenly, I had a lot of spare time on my hands, so I reached out to my class rep and asked him to help me find an online writing gig. In just two months, I had earned Ksh60,000 working in the hostel's cyber café. I eventually bought myself a laptop, which came in handy when writing my thesis, and I even “pimped” up my hostel room. I couldn't help but wonder how different my financial stability could have been if I had started this side gig earlier and the possibilities it could have opened, such as enrolling in a foreign language course.

Not only did the part-time job cover my expenses, but it also taught me valuable time management skills. The financial independence I gained gave me a sense of responsibility and made me more conscious of my spending habits.

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4. Saving and Investing Early Pays Off

The truth is four years might seem like a lot of time, but they end very first. And when the four years end, you will no longer be in the shield of student privileges such as a parent stipend, living in a hostel, or eating in a school mess. Waiting until after graduating to start saving can put you at potential risk of financial vulnerability.

Putting aside a portion of your pocket money and investing wisely can lead to financial security and future opportunities. Besides, time is a powerful ally when it comes to investments. The sooner you start, the more time your money has to grow through compound interest. It’s a financial lesson that can set you on a path to financial security in the future.

Starting a savings account during my university years could have helped me accumulate funds for emergencies, future education, or investments. Additionally, learning about basic investment options, such as stocks or mutual funds, and seeking guidance on long-term financial planning would have set me on a more secure financial path after graduation.

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5. Don’t Follow Your Friends’ Money Habits

During university, the temptation to keep up with peers and indulge in unnecessary expenses can be strong. But, it is important to remember that not all students are created equal.

Your best friend may have a completely different financial situation than you. She may be wealthy and have tons of money to spend. Conversely, she may be horrible with money and spend every penny she has. The point is that you should not follow what your friends are doing - just live within your means. Always ask yourself, "What is the wise decision for me to do given my situation?" This will guide you towards the best financial decisions tailored to your unique situation.

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6. Don’t Underestimate Emergency Funds 

To be honest, whenever I heard of emergency funds, I used to think about car repairs, major medical expenses, or getting kicked out of my house by the landlord- things I believed were way beyond me. But students too can have an emergency situation that would require tapping into emergency funds to solve.

 I recall one incident when I was walking back to the bus stop from school, and my dad called. My phone was tucked in my ear, and someone suddenly snatched it. I had to wait for a week for my parents to buy me a new one. Usually, all class updates were made through a WhatsApp group, and I missed out on a lot. 

Without a safety net, situations like these can lead to stress and financial strain hindering your ability to focus on your studies. 

Ideally, I should have started saving a portion of any money I could get while in school as soon as I entered university. Even a small, consistent contribution to an emergency fund can provide peace of mind. It is not just about saving for a rainy day; it is about ensuring that unexpected financial setbacks do not derail your academic journey. 

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7. Create Financial Goals Now

Instead of waiting until you graduate, get your first job, or reach your late 20s to start your financial planning, start now. This begins with deciding what you want for your life and setting financial goals. Perhaps you want to move into your own apartment when you graduate, be debt-free, have an emergency fund, buy a car by the time you are 25, and be able to retire at 60 years old. 

If you start making decisions that move you in that direction while you're still on campus, it will be a lot easier than if you start when you're 30 years old. Establishing what you want and setting goals will help you create the life you desire, ultimately leaving you with fewer regrets.

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8. Financial Literacy is an Ongoing Journey

I also wish I had recognized that financial literacy is a lifelong learning process. It does not end when you graduate from university, and different financial tips apply in different situations.

Understanding taxes, investments, insurance, and other financial concepts is crucial as you navigate the complexities of adulthood.

I should have sought out resources, workshops, or courses on financial literacy available on campus or online. Building a strong financial foundation requires continuous education and a willingness to adapt to changing financial circumstances.

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9. Most Importantly Though, I Wish I Knew that Limited Funds Do Not Define You

It's easy to be hard on yourself when your funds are limited. When your pocket money just barely covers your expenses, and you have to decline social outings with friends because of it, remember that your worth extends beyond your financial situation.

You are not solely defined by your finances.

Too often, I felt trapped because, despite my efforts, I couldn't afford purchases beyond the essentials. However, I wish someone had told me that - regardless of money mistakes, your grades, or your bank account balance, you deserve to be appreciated beyond your situation.

Your financial and career journeys are just beginning, and limited funds do not determine your ultimate success.

10. Credit and Debit Cards Require Responsibility

I received my first debit card when my mother helped me open a bank account upon joining the university. It proved convenient when shopping or times when I found myself in town and out of cash. However, my lack of budgeting knowledge and influence from friends led to overspending.

Many students have irregular incomes, but it is possible to budget based on your basic survival needs. Debit cards shouldn’t be feared, but they shouldn’t be misused either. 

When it comes to credit cards they can both be a blessing and a curse. While I avoided credit cards to steer clear of debt, I missed out on benefits like membership rewards that could have maximized my spending. I also missed out on learning how to use a credit card responsibly.

Wrapping Up

Understanding these financial lessons during my university years would have undoubtedly paved the way for a more secure financial future. Budgeting, emergency funds, responsible credit card usage, creating financial goals, and wise student loan decisions are just a few of the vital financial concepts I wish I had known. These lessons aren’t just about managing money; they are about setting yourself up for financial success throughout your life.