©2008 texas guaranteed student loan corporation money management 101
TRANSCRIPT
©2008 Texas Guaranteed Student Loan Corporation
Money Management 101
Money Management 101
Did you know?
• The total amount of consumer debt today is
• 78% of all undergraduate college students (ages 18-25) carry an average balance of
• The average interest rate for a student credit card is
$2.5 trillion.
$2,748.
14.57%.
Sources: Federal Reserve, NellieMae, and IndexCreditCards.com
Money Management 101
In this session:
• Setting up a spending plan
• Understanding financial needs versus wants
• Minimizing your debt
• Keeping good financial records
Know where your moneyis going
Balance your income and expenses.
income expenses
Money Management 101
How do I establish a spending plan?• Determine your expected monthly income from:
– Financial aid (paid directly to you);– Employment (after tax, take home pay); and– Family contributions.
then,
• Determine your expected monthly expenses:– Housing– Food– Loan and/or Credit card payments– Utilities
Money Management 101
Monthly living expensesFood
13.9%Clothing
5.2%
Housing/Utilities33.2%
Healthcare2.5%
Transportation20.1%
Education4.5%
Entertainment4.8%
Charity2.2%
Insurance/Pension8.1%
Misc.5.5%
Source: US Department of Labor, Bureau of Labor Statistics
Money Management 101
How do I stick to my spending plan?
• Keep files to organize the following:
– Bills– Bank accounts– College forms– Income– Insurance– Loans– Taxes, and of course,
– Use the spending plan worksheet provided.
Money Management 101
Know where your money goes.
• Keep a daily spending diary to know exactly where you are spending your money.
• Use a monthly payment calendar to be sure you are able to cover your expenses as they are due.
• Use a computer program to help you track your money and budget.
Distinguishingbetween
needs and wants
Money Management 101
Needs
GroceriesShelterUtilitiesPhoneTuitionBooks
Clothes
Wants
Fast foodCar
Cable TVCell PhoneVacation
Movies/musicDesigner clothes
Money Management 101
Balance your needs against your income.
needs
income
Money Management 101
Ways to reduce expenses
• Get a(nother) roommate.• Shop at thrift stores.• Use discount coupons.• Go to matinee movies.• Use public transportation.
Money Management 101
Ways to reduce expenses
• Eat meals at home.
• Don’t shop for groceries when you’re hungry.
• Drop your gym membership.
• Wait for sales and avoid impulse buying.
• Find free stuff.
Money Management 101
Ways to increase income
• Take advantage of all types of financial aid.• Get a part-time job.• Ask for practical birthday/holiday presents.
– Household items– Phone cards– Microwave/mini-fridge– Gift cards to school bookstore
Money Management 101
Ways to increase income
• Provide tutoring.• Baby-sit, pet-sit, mow lawns.• Volunteer for research studies.• Have a garage sale.• Resale used books, CDs, movies.
Minimizing debt
“The only reason a great many American families don’t own an elephant is that they have never been offered an elephant for a dollar down and easy weekly payments.”
— Mad Magazine
Money Management 101
Borrow conservatively!
• Student loans are for educational expenses ONLY.
• Don’t borrow the full amount offered to you.
• Consider earning potential when borrowing.– Student loan debt < 8% of potential income
Money Management 101
Borrow conservatively
• Look for other types of financial aid, such as grants, work study, and scholarships.
• Take advantage of the federal student loan programs BEFORE you borrow alternative loans. (More borrower benefits and lower interest rates)
• Let your parents borrow on your behalf.
Money Management 101
Credit card strategies
• Limit yourself to one credit card.– For emergencies only– To help yourself establish a good credit history
• Understand all credit card terms.– What are the fees?– What are the interest rates?– Is there a charge/different rate for cash advances?
• Pay off your balance every month.
Money Management 101
Beware of fees.
• Cash advance fee• Balance-transfer fee• Late-payment fee• Over-the-credit-limit
fee
• Credit-limit-increase fee
• Set-up fee• Return-item fee• Other fees
Source: www.federalreserve.gov
Money Management 101
What to do if you fall behind on payments:
• Cut recreational expenses.• Call the credit card company (they may be
willing to work out a repayment schedule).• Develop and stick to a spending plan.• Consider credit counseling services.
Establishing checking and savings
accounts
Money Management 101
Establish bank accounts
• Open checking and savings accounts.• Balance your checkbook regularly.• Compare your checkbook to your
monthly statement. – Deduct bank fees and service charges.– Add interest earned.
Money Management 101
Online banking tips
• Understand that debit card expenses and ATM withdrawals are deducted from your account the same day.
• Keep track of your current balance using your bank’s online services.
• If you schedule recurring payments, be sure you have sufficient funds when the payment is due.
Money Management 101
Education is the ultimate investment!
• Stay in school.• The higher your degree, the higher your
income potential.
Money Management 101
Average Monthly Earnings (thousands)
Source: U.S. Census Bureau, Survey of Income and Program Participation, 2004 Panel
0
95% more
Keeping goodfinancial records
Money Management 101
Important financial records
Remember to keep:
• Copies of award letters,• Copies of promissory notes and lender
information for future student loan repayment, and
• School receipts (for tuition/fee/housing payments).
Money Management 101
Important financial records
Remember to keep:
• Copies of paid bills for the last 3 months;• Copies of pay stubs and W2s for tax filing;• Copies of car repair receipts, car insurance
paperwork, car registration; and• All bank statements – either paper or
electronic.
Money Management 101
Questions?
©2008 Texas Guaranteed Student Loan Corporation
Please e-mail questions or comments to [email protected]
To order additional copies, or to request permission to reproduce any of the information provided, please call TG Communications at (800) 252-9743.