If you don’t have it, don’t spend it. Now more than ever, students need to start understanding how to budget their money. In today’s economy today, students need to be aware of the different options available to them to help budget their income, or lack of it.
Between school, car payments, insurance, gas, food and a social life, it is easy to see how students can become overwhelmed when trying to finance their money. The biggest problem today is not enough cash coming in and too much going out. So what’s the first step?
“You have to have all your own personal details in order to prepare a
budget.? You need to be able to know your income, savings and investments
and you have and how much you owe,” said Richard Hillquist, Business Administrator at GCC.
Understanding limits is crucial when trying to budget. The main problem students have is spending money that they don’t have. To help solve this problem, budget sheets provide an easy way to organize income. Listing income on one side of the paper and expenses on the other will help students visually see that their income is far less than all of their expenses combined. Students can find pre-planned budget sheets online.
“Write down all expenses you expect and the amount you expect to pay. Set aside money for incidentals that are not on the list,” said Rory Schlueter, who works for GCC’s Computer Science Information Center. “Make sure the money coming in, is more than the money going out.”
Becoming aware of where money goes is also an important step. Keeping a small notebook of every cent spent on snacks, gas, movies, shopping, and other expenses will help keep budgets strict.
Linda Serra, the chair of Glendale College’s business department, suggests that students take their time when shopping around and look for the best prices. She said to bring a calculator along while shopping because the larger package may not be a better price, ounce for ounce.
Skip the money hidden in the mattress and start understanding the benefits of holding money in a bank or credit union. Both have specific programs designed for students saving for adulthood. If students take time to do the research, they may be surprised to see how much money they can save.
Credit unions specialize in personal connections with customers. They tend to offer lower interest rates for student loans, auto loans and credit cards. These are things that the average student is most likely investing in at this time in their life. Unlike major banks, a credit union is less likely to charge a high fee for a checking account or accessing an ATM. They also offer minimal balances to maintain accounts such as a checking or savings.
Banks, on the other hand, offer a wider selection of services. Banks are also more available to the member due to their many locations. Many branches have different locations all over the country. This makes transfers and travel easier for the member. Many people go to banks for larger investments.
Shirley Tapp is the CEO at the Glendale City Employee Federal Credit Union. She suggests students open either a Traditional or a Roth IRA. Both offer great savings. The main difference between the two is that a Traditional IRA will help save money on taxes now. A Roth IRA will save money for retirement.
“The younger you open the account the better because of the compound interest and earnings per year,” said Tapp.
A tip for students is to maintain accounts at both a credit union and a bank. Once the differences are understood it becomes easy to use. A student could open a savings account at a credit union because the interest rates are usually higher, and then open a checking account at a bank to balance the accounts.
The main goal for students who are trying to become independent is to save, save and then save some more. Before spending any amount of money, no matter how big or small, students should analyze what it is, whether it’s necessary, and if fits into their budget.