By Lindesy Huddleston/reporter
Students learned that budgets and credit cards can play a big part in personal finances during a Feb. 4 presentation on Trinity River Campus.
Lucas Sawyer of Worthington Bank answered the first question most students were eager to ask, “Where do I begin when balancing my budget?”
The first step in managing money is to draw a distinct line between needs and wants, Sawyer said. The next step is to make a list of goals to help keep someone on track. Not only is it crucial to set goals, Sawyer said, but people need to make plans on how to reach them. The final step in balancing a budget is to take action.
“The greatest plan still fails if no action is taken,” he said.
Credit cards offer both advantages and disadvantages. Sawyer said credit cards can be helpful because they are much more convenient than using cash or checks.
Many students who attended said they do not carry a checkbook anymore.
Not only do credit cards enable people to buy the things they need, but cards also allow people to buy the things they want. Most importantly, Sawyer said, they are an advantage because they help people build credit.
Sawyer said many people who use credit cards are unaware how much more things cost with interest, how easy it is to accrue large balances and how expensive credit card fees can be. For example, that new swimsuit someone is dying to show off this spring might cost $98 at a department store, but it can soon become much more expensive in a short amount of time.
If the shopper pays the minimum amount required on her credit card each month, that swimsuit alone could end up costing around $300. For instance, if she paid $10 per month on that swimsuit, only $2 would be credited to the actual purchase. The remaining $8 is used for interest and fees.
“Things will start to cost more than the original price if you don’t pay off your full credit card payment at the end of the month,” he said.
Credit cards are best used when people are positive they can pay off the entire balance at the end of the month.
“Credit cards should mostly be used for emergencies, instead of bills and groceries,” he said.
Sawyer asked the audience if they knew why credit scoring is important. When many didn’t know, he said a credit score is a long file encompassing information that keeps up with a person’s payment history and habits.
He said it is important to keep a good credit score to one day make big purchases, such as cars and houses. A good score means someone will have more approvals, better terms and rates and cheaper overall costs.
As of now, Sawyer said, Texas has the lowest average of credit scores, around 651. Anywhere in the range of 700-721 will get anyone approved for any substantial loan or purchase in the future.
For information on how to balance a budget, contact Sawyer at Worthington Bank’s Sundance Square office.
