Managing Your College Cash

Eons ago, when I was in college, my parents would send me a letter or card now and then with a five or ten dollar bill in it. That kept me in snacks and movie money. I know, I know. You high school students who are reading this are probably laughing. “Card? Letter? Five bucks!?” Well, as my grandfather used to say, “Back then, Buster, that’s when five bucks was worth five bucks!” So, do a little inflation calculation if you don’t think that five dollars had some buying power back in the ’60s.

Anyway, the point of my post today is to bring you some information about college budgets. When you get to college, you’re going to be faced with some real-world challenges concerning spending and money management. Most of you won’t have parents who will facilitate a credit card with an unlimited balance. What cash you do have or will earn through a part-time job will be subject to a number of demands that you will have to prioritize. That will likely be your biggest challenge — deciding which expenses are mandatory and which can be delayed or juggled.

I found an excellent article by Jodi Kaus and Eric Higgins that should be able to offer you not only some excellent budget guidelines but also some insights into the reality of managing money by yourself while you’re at college. Here are some highlights:

MONEY MATTERS: SETTING A BUDGET, FINANCIAL PLANNING CAN HELP COLLEGE STUDENTS NOW AND IN FUTURE

A college student’s idea of investing may lean more toward purchasing season basketball tickets than an individual retirement account, but financial experts say taking a more focused look at their financial situation early can help students budget for today and the future.

Budgeting should begin before a student even sets foot on campus, said Jodi Kaus, program director for Powercat Financial Counseling at Kansas State University. Students may have extra funding from high school graduation gifts, savings bonds or part-time job income, and it’s important to put that money to good use …

… new credit card laws allow parents of young credit card holders to be more in tune with their student’s spending habits. This also can help alleviate mismanagement of credit at an early age …

… credit card tips include:

* Don’t open too many lines of credit — holding more cards than needed — because it can hurt your credit score.

* Call to cancel unwanted cards immediately — don’t simply cut them up and throw them away.

* Pay credit bills off each month in order to avoid interest charges, and don’t use them as a substitute for cash.

… To make the road to financial success at a young age a little smoother, it helps to avoid some common pitfalls …

… tips for avoiding budgeting mistakes include:

* Using a pocket-sized debit card register to record transactions.

* Paying yourself first by automatically directing a percentage of each paycheck to savings instead of checking.

* Setting aside 10-20 minutes each week to review a spending plan and monitor progress.

* Remembering to take into account any withholdings from paychecks.

* Always paying bills on time — possibly setting up automatic payments — because timely bill payment is the largest factor in determining credit worthiness.

* Monitoring credit usage. It is recommended that credit card holders use no more than 25-30 percent of their credit limit at all times.

*Avoid short-term solutions, like payday loans intended to cover a borrower’s expenses until the next payday. Higgins agreed, adding that there is never an instance that a payday loan would be helpful to a student. There are laws on how much these businesses can charge, but few regulations on their fees …

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So, be smart and prepared for your college money management days. You’ll be glad that you did.

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