Realistic Money Management for University Students

Table of Contents:

• Why Money Management Is Important for University Students
• Setting Up a Budget: The First Step
• Budgeting Techniques and Practical Money Management Tips for Students
• How to Save Money as a Student
• Personal Finance Tools and Apps for Students
• To Recap

Here is a shocking reality.

More than 70% of university students cannot comprehensively summarise their monthly expenses.

According to research on how financial stress affects the academic performance of Nigerian students, some factors that contribute to financial stress include students’ monthly income, the cost of academic materials, their ability to save, and the cost of food. Do you know why?

Managing your money while studying at university can be challenging, especially when you have tuition fees, rent, food, and social life to balance. 

After worrying about having enough money to pay for school, there is also the concern about paying monthly expenses. And, sometimes, amidst all the bills these students have to pay, they lose sight of how to track their expenses and manage their finances.

Many students grapple with money management strategies because they believe they are not realistic enough and are often compiled by non-students who do not understand their plight.

Learning how to manage money can seem like a steep hill to climb for students, but it’s an essential skill. 

In this article, we have compiled realistic money management strategies. These strategies can help you stretch your budget, avoid debt, and develop healthy financial habits that will last long after graduation.

Before diving in, here is a helpful article on how an architecture student developed financial management strategies to survive her first year.

Why Money Management Is Important for University Students

Who likes being broke and not being able to provide basic needs? No one! 

This is especially true when you are sponsored by a parent or guardian or working part-time to support yourself as a student. 

Handling school work alone is already a strenuous activity for anyone, not to mention compiling that with money problems. If that is not a recipe for mental health concerns, then I don’t know what is.

University life comes with multiple expenses—tuition fees, textbooks, rent, food, and social activities—all of which can quickly add up. Without proper money management, it’s easy for students to overspend, accumulate debt, or struggle to meet basic needs.

The stress of having limited to zero funds can negatively affect students' academic performance and overall well-being. 

This is why money management is an essential skill for university students, as it helps them stay financially stable during their studies and beyond. 

By learning personal finance, undergraduates and even graduate students can better handle these financial challenges. 

For example, creating a simple budget can help track spending and avoid unnecessary expenses. Students who manage money well are more likely to avoid falling into debt traps, especially in the gradually receding economy.

Setting Up a Budget: The First Step

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Creating a budget is the first and most important step in managing money as a university student. 

Don’t let the name make you feel like it is difficult. A budget is just a simple plan that tells your money where to go so you're not left wondering where it disappeared. 

If you have ever been confused about why you lost so much money at the end of the day and could not believe that you spent up to the sum you ended up with, then that is a budgeting problem.

A budget is a roadmap to help you manage your finances effectively. It ensures you cover your essential expenses and save some for the future. Understanding your income and expenses is the key to personal finance for students.

Start by calculating your monthly income. For most students, this includes allowances from parents or guardians, income from part-time jobs, and scholarships or student loans. 

For example(these amounts are just variables used to paint a more realistic picture), if you receive a ₦20,000 allowance and earn another ₦30,000 from a part-time job, your monthly income is ₦50,000. 

Once you know your income, list out your fixed expenses, such as rent, phone bills, and tuition fees. For instance, if your rent is ₦15,000 per month, your phone bill is ₦3,000, and transportation costs ₦5,000, you’ve already spent ₦23,000, leaving you with ₦27,000. If you pay your rent annually, you can contribute towards that every month.

“I stopped relying on my parents to pay my full rent 

in my third year. I started saving a small amount

from the monthly allowance they gave me and my social

media management job. I was able to raise enough to 

pay my final rent as a student. Now, I’m saving 

towards post-graduation.”

Precious, Psychology Student

Next, set a limit for your variable expenses like food, leisure, and transportation. For example, you can allocate ₦10,000 for food, ₦5,000 for outings, and ₦3,000 for miscellaneous items. It’s also a good idea to put aside a small amount for emergencies, even if it’s just ₦2,000 per month. That way, you don’t have to scramble for cash when unexpected expenses arise. 

Using a budget doesn’t mean you have to give up all the fun stuff; it just helps you prioritise your spending and avoid running out of money halfway through the month. 

Many students find that budgeting apps or a simple spreadsheet help them track their spending and stick to their plans. 

Budgeting Techniques and Practical Money Management Tips for Students

To manage your money effectively, you have to track every naira (or dollar) to ensure it goes as far as possible. 

What’s best is finding a method that works for you and sticking with it. Here are some techniques and tips that can help with managing your finances:

1. The 50/30/20 Rule:

The 50/30/20 rule is an “old is gold” type of rule that has been proven to work over the years.

It is a simple budgeting strategy that splits your income into three categories: 50% for essentials (like rent, groceries, and bills), 30% for wants (like eating out or entertainment), and 20% for savings or paying off debt. 

This rule forces students to prioritise their needs while still allowing some room for fun. For example, if you receive ₦50,000 monthly, ₦25,000 should go to essentials, ₦15,000 to wants, and ₦10,000 to savings. 

Sticking to this rule can help you avoid overspending on non-essentials and prevent you from feeling regret after making an impulse buy.

2. Track Your Expenses:

Keeping track of where your money goes is one of the best ways to manage money for students. 

Recording every expense, whether in a notebook, a spreadsheet, or an app will help you stay on top of your finance management game. 

For instance, many students find themselves spending small amounts on things like airtime, data, or snacks, which can quickly add up. 

Writing down these purchases can help you see where you might be overspending and where you can cut back. 

3. Use the Envelope System:

The envelope system is an old-school but effective way of budgeting. 

In this system, you set aside physical cash for different categories of expenses, like food, transport, and entertainment, and put the money in separate envelopes. 

Once the envelope is empty, you can’t spend any more in that category until the next month. 

This method is beneficial for students who find it hard to control their spending with a debit card. 

For students like this, if you allocate ₦5,000 for food each month, once that envelope is empty, you know you’ve reached your limit and need to make adjustments.

4. Prioritise Needs Over Wants:

As a student, learning to separate needs from wants can be a game-changer for your personal finances. 

Needs are essential expenses like school fees, textbooks, rent, and transport. Wants, on the other hand, include non-essential spending, like going out with friends, buying new clothes, or getting the latest gadgets. 

A good tip is to always ask yourself, “Do I really need this, or do I just want it?” before making a purchase. This can help you focus your spending on the things that really matter.

“Sometimes, even those things you thought were needs

could turn out to be wants. I analysed my expenses

in my second year as an undergraduate and realised

that I could do without some things I initially 

thought were needs. Make sure that your

needs are actual needs and not some wants you

gave elevated importance.”

Kelechi, Radiography Student

5. Set Savings Goals:

Even as a student, saving money is important. 

Start small by setting realistic savings goals. For example, you could aim to save ₦5,000 a month, which, over the course of a year, adds up to ₦60,000. 

You can use these savings for emergencies, such as unexpected school fees or repairs, or even for something fun, like a trip after graduation. Opening a separate savings account is also a good idea, so you don’t accidentally spend the money.

6. Take Advantage of Student Discounts:

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Many businesses offer student discounts, so take advantage of them wherever possible. 

For instance, in some countries, students can get discounts on transportation, gym memberships, and even meals. 

Always ask if there’s a student discount available before making any purchase. 

These small savings may seem insignificant, but they add up over time and can help you manage your personal finances more effectively.

How to Save Money as a Student

1. Meal Planning and Cooking at Home:

One of the easiest ways to save money as a student is by cutting back on eating out. Many students spend money on snacks, fast food, or expensive restaurant meals. 

However, cooking at home can save you up to 50% on your food budget compared to eating out regularly. 

Create a weekly meal plan, buy groceries in bulk, and cook in batches to avoid last-minute spending on takeout. For example, preparing meals for the week on Sunday can prevent impulse purchases during busy school days. 

To get started, plan your meals for the week and buy groceries based on that plan. Sticking to a shopping list helps avoid impulse buying. For example, instead of spending ₦2,000 on fast food daily, you could spend ₦5,000 a week on groceries and have enough for multiple meals. 

That’s a significant saving over time.

2. Save on Textbooks and Study Materials:

Textbooks can be a huge expense, but there are smarter ways to get the books you need. 

Instead of buying new textbooks at full price, look for cheaper alternatives. You can borrow from the school library, purchase used books from websites like Konga, or even join student groups where others sell or swap textbooks. 

Another option is renting textbooks, which can save you up to 60% compared to buying new ones. 

Sharing study materials with classmates is another smart way to cut costs.

3. Housing and Rent Hacks:

If you’re living off-campus, you can save a lot on rent by sharing housing with roommates. 

Splitting rent, utility bills, and even groceries among two or more people can significantly reduce your living expenses. 

Also, consider looking for affordable housing options in less expensive neighbourhoods or apartments just outside the university area. 

These small changes can make a big difference in managing money effectively as a student.

“When I first started university, I used to visit the 

market almost every day to buy food items.

I used to cook in smaller portions and ended

up spending a lot on food alone.

Now, I visit the market once every two weeks

and make sure I buy food items in bulk. Every 

Sunday, I cook two weekly meals and store them 

in the fridge. It’s been a great hack so far.

Whenever I’m tempted to get takeout,

I always remind myself that there is food at

home.”

Samuel, English Student

Personal Finance Tools and Apps for Students

1. Budgeting Apps:

Budgeting apps are valuable for students learning how to manage money. 

These apps help you create a monthly budget by tracking your income and expenses. 

For example, some of these apps encourage users to assign every naira a job, ensuring that all money is allocated towards expenses, savings, or debt repayment.

2. Expense Tracking Tools:

Expense-tracking apps make it easy to track daily spending. 

Some of them allow students to categorise their expenses and visualise their spending patterns, making it easier to identify where they might overspend. 

3. Savings Apps:

Using savings apps can significantly benefit students looking to save money. 

Some apps automatically round up purchases and invests the spare change, while others analyse your spending habits and save small amounts of money for you without you even noticing. 

Some of them have a “set it and forget it” method that can be beneficial for students who struggle to save manually. 

4. Investment Platforms:

For students interested in learning about personal finance, investment apps offer simple ways to begin investing. 

These platforms allow students to start investing with little money, often with no commission fees. They also let users invest in fractional shares, making it easier for students to build an investment portfolio without needing large amounts of capital. 

5. Bill Reminder Apps:

Students often forget due dates for bills, leading to late fees and unnecessary stress. Bill-reminder apps help remind students to stay informed about upcoming bills, ensuring they never miss a payment. 

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This simple reminder system can save students money and help them maintain a good money habit. 

6. Personal Finance Education Resources:

Many platforms, such as the Obiex Blog, offer free courses and articles on personal finance for undergraduates. 

These resources cover topics like budgeting techniques, investing basics, and understanding credit. 

Learning through these platforms can empower students to make informed financial decisions.

To Recap

• Proper money management is essential because, without it, students can easily overspend, accumulate debt, or struggle to meet basic needs.
• Always set up a budget before you start spending any money you receive. Without a budget, you might make a financial decision that you will regret later.
• Separate your fixed expenses from your variable expenses to determine which items get priority.
• The 50/30/20 rule may be old, but it always works—50% for your needs, 30% for your wants, and 20% for savings.
• Tracking your expenses is the best way to account for them. You can use this spending history to improve your financial habits.
• If you need help to control your spending with a debit card, try the envelope system. Set aside physical cash for different categories of expenses and put the money in separate envelopes.
• Always separate your needs from your wants. Before making a purchase, always ask yourself, “Do I really need this, or do I just want it?”
• Use fintech tools and apps to improve and streamline your money management skills.
• Try buying groceries in bulk, cooking your meals at home, and storing them in the refrigerator instead of spending on eating out.
• If you need tips on managing money in your 20s or 30s, click here.

Disclaimer: This article was written to provide guidance and understanding. It is not an exhaustive article and should not be taken as financial advice. Obiex will not be held liable for your investment decisions.