There are many articles that discuss student budgets, but not many take this one crucial factor into account: personality.
Understanding your personality – and more specifically, your relationship with the past, present and future – is integral to finding a budget that works for you – at least Stanford Psychology Professor, Phillip Zimbardo thinks so.
According to Zimbardo’s study, Time Personality and Financial Health, your ‘time personality’ – or your relationship to the past, present and future – is the main influence on your spending habits.
Having a grasp of the way you spend can help you develop a budget that works for you, rather than fighting a losing battle against yourself and your wallet.
1) The nostalgic type
Do you often find yourself daydreaming about happy memories or thinking back when making decisions? If you do, you’re likely a past-oriented personality.
Past-oriented people tend to justify their spending based on returns they’ve had from past transactions, so they’re likely to make logical decisions in the present.
Not according to Zimbardo you don’t… Source: Giphy
The drawback to this personality type is they can be overly anxious about past memories.
This can prevent them from taking the odd spontaneous weekend away with their friends based on a time they ran out of money years ago, or stop them splurging out in the (justified) knowledge they’ll be paid again soon.
How to budget:
Since you’re generally good at managing your finances, your goal is to have a ‘spontaneous fund’ for the odd treat.
At the end of every week, try and put a small amount aside that you can use for whatever you please – even if it’s just $5 or $10.
This will give you a fund to dip into for those random fun things you would usually question yourself about – you know you still have your ‘everyday budget’ for the essentials, but it offers you more freedom to enjoy the present as well.
2) The ‘live in the moment’ type
Do you tend to act spontaneously? Take action first and worry about the consequences later? If so, you’re likely a ‘present hedonist.’
Present hedonists are known as risk takers, often seeking out the next thrill with little concern for the backlash. You live life to the full and never miss out, but the same can’t be said for your bank balance.
If you’re like this guy, it may be time to start budgeting. Source: Giphy
Often making risky financial decisions in the name of excitement, your wallet usually takes a hit and savings seem like nothing more than a pipe dream.
While it may feel fun to live this way, it’s unsustainable in the least and self-sabotaging at the most. What happens if you suddenly need to pay a big bill – and we’re guessing you don’t have insurance…
How to budget:
So far, your budgeting skills leave a lot to be desired, you likely have no savings and overspend every month.
You’re going to have to bite the bullet and start with a strict yet flexible saving plan – too inflexible and you’ll break it anyway; not rigid enough and nothing will change.
The ‘envelope method’ is a good option for you. This is an old-school budgeting tactic where you take all your money out at the beginning of the week and physically sort it into separate envelopes.
It might seem impossible – but try and stick with it. Source: Giphy
You should have an envelope for:
- Books and stationary
- And – most importantly – savings
The only rule is that you put a quarter of your weekly budget into the ‘savings envelope’, and you cannot touch this.
Apart from this rule, it’s up to you how much you put in each envelope, and you can borrow money from different pockets (except savings) to make ends meet.
This should allow you to understand your spending patterns, while also allowing you to put some savings aside for future you to enjoy.
3) The graduate optimist type
Do you justify your overspending based on the hefty graduate salary you’ll score soon? Are you confident you’ll be rich one day, so your finances right now don’t matter? You could be a positive-future personality.
You don’t worry about what you spend right now, because you know it’s all going to work out in a few years when you’re sipping champagne on your yacht. In fact, you barely even know what your monthly income and outgoings are.
Your main problem is keeping track of your spendings, so you’re often playing financial Russian Roulette. “Will I have plenty? Will I be overdrawn? Who cares – I’m going to be rich and famous soon anyway.”
So what? US$5,000 will be pennies when you’re a rich and successful graduate. Source: Giphy
How to budget:
You need to come to terms with what you have right now. You’re banking salary of the future isn’t going to help you when you can’t pay next month’s rent.
Start by identifying your monthly or annual income and your saving goals. Do you have a big holiday coming up, or a flight back home to buy?
You then need to start tracking where and when you spend money. Apps like Walley allow you to track your transactions so you can identify where you spend the most money. This will help you see where you overspend and realise that all those little transactions add up.
Once you have a grasp on your incomings and outgoings, you can work towards meeting your saving goals in the here and now, and save your days of lavish spending for when you’re earning that extravagant paycheck.
4) The over-anxious saver
On the opposite side to the graduate optimist, you fit this personality type if you’ve skipped the happy future where you’re financially stable and gone straight onto saving for future life disasters.
If you’re already saving for your child’s college education before you’ve graduated yourself or you’re planning for your retirement before you’ve even launched your career, you might match the negative-future personality.
…you whisper to your savings. Source: Giphy
While it’s no bad thing that you’re preparing for all eventualities, being a student is probably the last time you’ll have as much freedom as this. Living every day like it’s your last is not sound financial advice – but living every day for your last isn’t really any better.
How to budget:
Sit down with a pen and paper and logically plan everything you need to save for. Do you really need to put such a large chunk of money aside for your retirement or mortgage while you’re still at university?
If you can’t cope with entirely distancing yourself from your future savings, make realistic long- and short-term goals that allow you to have fun now without jeopardising your future.
When you’ve worked out how much you can spend each month, enlist the help of friends to ensure you don’t slip back into old habits. Make sure they organise fun outings with you or encourage you to buy new things so you can enjoy the present rather than waiting for the day you can finally spend.