3 basic budget concepts every student should know
Balancing a budget is something every student studying away from home should become familiar with. Whether your budget feels endless or you’re on a tighter limit, this is a skill that can help students from all walks of life. Continuing our student life skills series, we’re looking at basic concepts for budgeting!
Make thoughtful purchases
We’ve all been there. Seconds away from making that impulse purchase we suddenly can’t part with. Maybe it’s something for your wardrobe, an expensive coffee every afternoon, or those little impulse buys around the register at the grocery store like candy, gum, or magazines. These things can add up quickly and in the end, might not offer so much benefit to our lives so it helps to consider your purchases before you’ve even entered the store (or, in the case of online shopping, visited the website).
Tip: Think carefully about what you’re purchasing. This doesn’t mean to completely cut out those fun little purchases, but just to consider them a bit more. Something that often helps is to wait a day or two before buying the item. If you still want it then, consider it yours but oftentimes you might have forgotten about it even a day later. And if you can forget about it so easily, you’ve got to ask yourself if you really wanted it in the first place.
Learn about local sales taxes
If you’re studying in the US and living there for the first time, you might have noticed that the total price you spend at a store is a higher amount than the price tags revealed. This is because of something called value-added tax (VAT), or a sales tax. They’re very common in the US and the UK and if you grew up in a country without them, it can be quite shocking to see the totals add up at the register.
Tip: Make sure you’re well-acquainted with local sales taxes and what they apply to. For example, in the state of California, purchases from a retail store will have a sales tax while most food won’t. Knowing these little details can help you recognize where the total cost might be more than what’s written on the price tag.
Be aware of retail pricing strategies
Have you ever noticed how easy it is to spend way more than you planned when you go to Target or H&M? These big retailers make it easy to part with more than you planned but this is especially true at a store like Walmart. They famously make use of a practice called Odd-Even pricing, a psychological technique that convinces shoppers to purchase more.
You’ve probably seen the 0.88 or 0.44 endings on a price tag. This looks less assuming than the common 0.95 or 0.99 ending on price tags because as consumers, we’re not as used to seeing prices like $10.88 as we are to $10.99. This strategy proves to be effective for retailers who use it because customers are more likely to purchase the item. $10.88 feels a lot cheaper than $10.95 even though the difference is just a few cents. Which causes shoppers to make more impulse buys and to purchase multiples.
Tip: It also helps to overestimate your totals and round up in your totals instead of down, especially when you see Odd-Even pricing. So, when you see that $10.88 sign, just round up and imagine it says $11.
At EF Academy, we prepare our students for success in their futures ahead. From academics to life skills, we ensure our students are ready for what’s next.