By Divya Thirumangai Alvar
They say you learn finance in class. Before I joined business school, “finance” only meant Wall Street, stock markets, and people in suits. But the truth? You experience finance every time you make a tiny purchase at the supermarket. Living as a student is like running your own tiny start-up. You have very limited capital (usually your parents or part-time job), unpredictable expenses, and a never-ending list of needs and wants. Every decision is a tiny financial choice, often made with a mix of urgency and guilt, and slowly those decisions teach you what no Excel sheet ever will.
Fixed Costs vs. Variable Costs
Every month starts with fixed expenses – rent, metro pass, mobile data. These are non-negotiables, the same way fixed costs show up on a balance sheet. But what varies wildly? (aka variable costs) How many times do you plan to eat out, impulse buying when you planned to just “window shop” , or “accidentally” buy pastries on stressful days.
Tracking these variable costs helped me understand how small decisions add up. I didn’t notice the drain until I saw I’d spent €23 in one week on snacks and “bubble tea” without a single real meal. Being a student means living with limited income and high FOMO (fear of missing out).
Managing your cash flow, inflows vs. outflows, is not just corporate finance basics. It’s survival.
The Risk-Return Ratio of Grocery Shopping
A city like Lyon has multiple supermarket chains. Every supermarket chain is unique and every item has different prices with different quality. That naturally makes each supermarket better for a few things. But again some supermarkets are far, others close. Some offer value based pricing, some offer volume.
So how do you choose?
Insert risk-return thinking for everyday life.
The “risk” – lower convenience, language barriers, or having to carry bags further.
The “return” – better prices, possibly higher quality, and long-term savings that add up over time.
Eventually, you start spotting patterns, which places overcharge, where the best deals hide, and develop your own methods to calculate and analyze, balancing cost, effort, and experience.
The Latte Effect
We all have our go-to comfort purchases. For some, it’s a warm cookie from the campus café. For others, it’s that mocha latte to survive back-to-back lectures.
“It’s just €3,” we say, smiling through the sugar rush.
But here’s where the Latte Effect comes into picture, small, seemingly insignificant purchases add up significantly over time and silently eat into your budget.
Let’s do some quick math: €3/day × 5 days/week × 4 weeks = €60/month.
That could be a winter coat, a couple of hobby classes or healthy meals instead.
Coffee isn’t the villain here, it’s the habit that compounds. And it’s not just about coffee.
€10 on Uber “because you are running late”
€7 on bubble tea to help you feel better
On their own, these aren’t major expenses. But here’s where the power of compounding comes into play. Deals like “2 for €5” feel like savings, but if you only needed one, you’ve spent more than necessary.
Little by little, they add up. Like compound interest.
Lifestyle Inflation
Lifestyle inflation is the tendency to increase your spending as your income rises. But what many don’t realize is that we’re already experiencing it as students, even without a salary. It begins in small, justifiable ways.
“I deserve sushi today. I had a long class.”
“That €90 tan coat? It’s an investment. I’ll wear it for years… probably.”
We tell ourselves these purchases are earned, and maybe they were once. But when this reasoning becomes a habit, our baseline spending increases, even if our budget hasn’t, leading us to live a lifestyle we cannot afford.
Daily Life is your Best Finance Teacher
No textbook ever taught me as much about money as living in France on a student budget did.
3 Key Takeaways (pardon for the MIM habit!)
– You learn to separate needs from wants
– You are prepared for the unexpected
– Saving is a mindset, not a sacrifice
Finance isn’t complicated jargon or running projections; it’s in every choice we make, and the more we observe our daily habits, the more we understand how money truly works.
