By Rylie Parkins/reporter
College is intended as a place to continue education and also have memorable experiences.
These experiences are difficult when students are stressed because of their finances.
Many students who pay their own way through college feel overwhelmed when it comes to budgeting for school and living expenses.
Many money management strategies are available to help keep one from going into debt. The strategies require a little bit of planning and a lot of self-discipline.
Budget Money
“ Consumers who purchase goods that they do not need but purchase them out of impulse are misallocating resources, thus not benefiting the economy,” Thomas Kemp, professor of business and economics on NW Campus, said.
• Make educated decisions regarding spending by contacting a financial advisor or visiting any banking Web site.
• Set a realistic budget based on income (bi-monthly, monthly, annually) and expenses.
• Decide how much money to spend for entertainment purposes.
• Limit outings to once a week.
• Save even more money by hanging out with friends at home.
• Establish a movie or game night once a week.
Save using the 70/20/10 plan
“ If you go to Starbucks every morning, five days a week, and spend $3.50 on your latte, that adds up to $910 annually,” Jo-Rita Dewey, assistant branch manager for Bank of Texas, said.
Dewey said coffee is a good place to start.
“ That is some expensive coffee,” she said. If you took that same $3.50 and placed it into a personal IRA, you wouldn’t miss the money because you already spend it anyway and earn interest on the money.”
• Devote 70 percent of income to living expenses including, rent, food and utilities.
• Save 20 percent for unexpected needs, debt and recreation.
• Put 10 percent into some type of savings account.
• Put 5 percent into some sort of emergency fund for medical bills, layoffs and car repairs.
• Set aside 5 percent for entertainment purposes.
• Spend 10 percent on debt: mortgage, student loans and credit cards
.Keep Credit Card Balance Low
“ With the sub-prime market taking the plunge right now, it is only going to get harder for someone with less-than-stellar credit to purchase a home with little or zero down,” Dewey said.
• Use a credit card for emergencies only.
• Use a credit card through a well-known company such as MasterCard or Visa versus a store credit card. The interest rates on store credit cards are significantly higher.
• Do not charge more than is affordable.
• Refrain from paying only the minimum balance.
• Invest in a pre-paid credit card.
“ Running up debt and paying it off faithfully and on time will have a lot less impact than running up debt, missing payments, making only minimum payments and maintaining high debts,” Margot Biery, South Campus economics professor, said.
Learn to Balance a Checkbook
Balancing a checkbook is “important enough that everyone’s parents should have taught them how to do it before their 18th birthday,” Lee Bailiff, economics professor on NE Campus, said.
• Verify that the checkbook register matches the bank’s register.
• Catch bank’s mistakes.
• Lessen the likelihood of overdrawing and bouncing checks.
• Increase the chance of noticing suspicious activity, thus being able to report it to the bank more quickly.
“ In addition, if there is activity on your account and you are not maintaining your account monthly, you are at greater risk for fraud, ” Dewey said.
Dwey said people have only 60 days after the transaction to notify the financial institution of unauthorized activity on a debit card.
“ More people lose money that way,” he said. “They have no clue until they are overdrawn.”
