Making Money Make $ense
By:
Julie Anderson, Assistant Director of Financial Aid
Agenda for Today:
Most Common Mistakes College Students Make
with Money
Why Money Management is SUPER Important
How to Make Thoughtful Financial Decisions
What you Need to Know to Make Good Money
Decisions While in College
Free Resources for you!
Most Common Money Mistakes Students Make: Spending Every Penny Instead of Saving
Living Beyond your Means – Racking up Debt
Average credit card debt for a graduating college student is $4100 – Sallie Mae
Letting your Bills Slide - Not Paying on time
The fastest growing group of bankruptcy filers are people 25 years of age or younger (19% of those are college graduates)
Spending “Extra” Student Loan Money
Not Researching to find the Best Deals
Not Keeping Track of Account Transactions & Balances
Example of Poor Spending https://www.youtube.com/watch?v=rvScCn2Ry4I
Why Good Money Management is Important
Credit Scores
What is a Credit Score?
Your credit score is a three-digit number generated by a mathematical algorithm using information in your credit report. It's designed to predict risk, specifically, the likelihood that you will become seriously delinquent on your credit obligations in the 24 months after scoring.
Credit Score range from 300 to 850
Why Good Money Management is Important:
Your Credit management habits affect your credit score & therefore,
your financial future
People with low credit scores – Pay MORE for:
• Rent
• Car Loans
• Car Insurance
• Mortgages
• Health/dental/Vision Insurance
• Purchasing a Cell Phone
If your credit score is low, it can prevent you from:
Getting an apartment
Getting a Job
Who Can See your Credit Score?
Any creditor or lender to whom you have applied for credit
A prospective employer
A mortgage lender
A Property management firm
Any current employer on a need-to-know basis
Any person to whom you have given permission
An insurance company
You
Why Good Money Management is Important:
When you graduate and start your first job, you’ll have new expenses:
Moving Expenses
Student Loans
Transportation (Parking fees, car purchase, car insurance, etc.)
Higher Living Expenses (food, rent, dry cleaning)
New Clothes for Work
The more debt you accumulate today, either through student loans, personal loans, or credit card debt, will impact the financial decisions you are able to make after you graduate.
What could help improve your credit score?
Check your Credit Report Annually
www.annualcreditreport.com
www.creditkarma.com
Set-up Automatic Payments or set up payment reminders
Reduce the amount of debt you owe
Pay off the highest interest cards first, while maintaining minimum payments on your other accounts.
Pay off debt rather than moving it around
Pay off balances each month
Avoid applying for credit needlessly
What you Need to Know to Make Good Money Decisions While in College
What you Need to Know to Make Good Money Decisions While in College
1. Develop a Monthly Budget and Track Expenses
2. Build an Emergency Fund
3. Manage Your Debt Effectively & Understand your Loans
4. What you need to know about your Credit Report and Credit Score
Budgeting, allows you: • Understand your spending habits • Control your excess spending • Reduce spending on non-essential things
and Save More!
Ways to Reduce your Spending:
Don’t buy unnecessary items
Comparison shop
Don’t buy name brand
Stop buying on impulse
Wait to buy something
Break expensive habits (Expensive Coffee)
Go out to eat less, use your meal plan
Use Coupons (Student Discounts)
Go to discount movies
Go to campus sponsored events
Keep your car maintained
Rent or buy used text books
Step 2: Build an Emergency Fund
Set up a Savings Account
Shop around for a bank that offers least fees and highest interest on your savings
Try to save 5-10% of your Monthly Income
• Can’t Afford to Save??
• Soda at $2/bottle everyday = $730/yr
• Daily Coffee at $3.50/Cup = $910/yr
Keep your savings separate from your daily living expenses, but accessible
Rule of Thumb: If you can’t pay cash, then you can’t buy it
Step 3: Manage Your Debt Effectively & Understand your Loans
Credit Cards
Shop Around (Bankrate.com)
Pay more than the minimum balance due
Pay the most toward the higher Interest Rate Cards
ALWAYS Pay on-time
Once you pay off a credit card, don’t close them – It could hurt your ‘utilization ratio’
Credit Cards: What to Watch Out For!
Low introductory rates that increase dramatically over time
Annual fees
Late payment fees (Could be as high as $35 plus finance charges)
Fraudulent Activity
Step 3: Manage Your Debt Effectively & Understand your Loans
Student Loans
Read the terms, conditions, and repayment options
Be mindful of capitalized interest – make interest only payments
Find out when your grace period ends and mark your calendar
• Staffod Loan Payment: 6 Months after Graduation
How to Repay
https://www.youtube.com/watch?v=oJHySMdXjxE
Step 3: Manage Your Debt Effectively & Understand your Loans
Loan Consolidation
Combine multiple debts into one monthly payment
Private and federal loans cannot be combined, must be consolidated separately
Any special repayment options with original loan agreement will be lost (i.e. grace period)
Interest rate may be averaged (possibly increased)
Refinancing
When done properly, can increase chances of getting out of debt sooner
Goal = Reduce your Interest Rate
Interest Rates
Your cost for borrowing money
Can vary with current market rates, loan length, amount borrowed, and type
Step 4: What you Need to Know about your Credit Report and Score Understanding your Credit Score
Maintaining a high credit limit is good
Credit scores are largely based on the amount you owe
The lower your utilization rate, the better
Review all 3 Credit Reports once a year (annualcreditreport.com)
Check your credit score before applying for new credit (creditkarma.com)
A mix of different credit types is good (Student loans, credit cards, mortgage)
College Life: Freedom & Independence, but also Responsibility for the Decisions you Make!
Pay your bills on time
Making sure you have more money than Month
Living within your means, paying credit cards in full each month
Researching big purchases
If you get into trouble, ask for help!
Don’t worry if it takes a couple tries to get a savings groove down!
Budgeting Tools
Clear Checkbook - www.ClearCheckbook.com A free, easy-to-use online checkbook register with a lot of extras. Students can balance their checkbook, get
daily reminders, and set budgeting goals all in one place.
MoneyStrands - www.moneystrands.com
This site has useful software and tools for any budget big or small. It automatically tracks all your financial accounts, offers advice to help you save money, and compares how your goals measure up to others.
iwallet- phone app (android or IOS device) https://play.google.com/store/apps/details?id=com.apt.iwallet
Inexpensive tool to take care of your money management.
Mint - www.mint.com
This free financial site makes it easy to understand and maintain your budget. Some of the many features Mint offers include money tracking, goal setting, and money saving tips.
Moneywise - phone app (android) https://play.google.com/store/apps/details?id=com.handynorth.moneywise_free&hl=en
Get a grip of your personal finances and track your everyday expenses using this top rated money management app. With MoneyWise you can create budgets and monitor cash flow.
Tips for Success Do well in your classes
Graduate College!
Limit the number of credit cards you have
Start Saving Now (Even if just $5 Month)
Learn to live without the non-essentials
“Live like a college student now, so you don’t have to after you graduate!”
Find creative ways to save money
Examples: Go to the movies during the day to save on ticket prices
Understand your Financial Aid Award
Not all of it is free money and may need to be repaid!
Reminders • Be sure to submit your Credit Balance Authorization through
your SFSC Student Aid Portal
• If you still have an unresolved outstanding balance on your student account, you may have a hold placed on your account that will prevent you from registering for Spring Semester
Questions???
