Spend Money
without breaking the bank
by Valerie Hisam
Everyone is doing it. It’s hard not to do it. It’s the new peer pressure of this generation: spending money. It’s a habit and an addiction that some just can’t break.
ATMs and credit cards have made it so easy. With the simple swipe of a card, there is instant money. It may seem like magic, especially for this generation, since money comes in the form of a plastic card that can be paid off “later” or “mom and dad won’t mind.”
“This could be because this generation has not necessarily had to work hard for their dollars,” said Laurel Kubin, who teaches money management and is the county extension director for Cooperative Extension based at CSU. Cooperative Extension is an organization for the public about research, information and requested expertise in any field from finances to horticulture to nutrition.
“Parents have had to provide for their kids, and not in all families have parents taught money management to children. So, they may not have a very good sense that there is not always money for everything,” Kubin said.
But for those that have to pay their own way, the ATM fees and credit card charges have to be paid off sometime. Since many students rely on credit cards and live from payday to payday, by the time those bills, car payments, house payments and the infamous school charges are paid, students end up broke.
Wait! There is a way to spend money, without breaking the bank. It takes a little budgeting and less spending, but saving the money will really pay off.
“Whatever it may be, that little bit you spend a day adds up in a year’s time,” Kubin said. She then explained that if a person stopped buying $5 coffees everyday, in a year they would save $1,825.
And saving is possible with a few money management skills. Budgeting usually sounds like a four-letter cuss word to most people, but having a money plan is about “making sure your money is going where you want it to go,” said Kathy Cox, the director of education and public relations for the nonprofit, financial advisement agency Consumer Credit Counseling Service of Northern Colorado (CCCSNC).
“It is not about deprivation,” Cox said, “but it is about empowering you so that your money works for you.”
There is a way for everyone to save money, but some just need a little more help than others.
“You can teach money management to anybody,” Kubin said. “You just need a plan, and then you have to live with the plan.”
Both Cox and Kubin work with people to help them develop good money management skills and live their own lives free of debt or worry. They are happy because they use and help others create easy, step-by-step plans that fit each person’s individual needs and budget.
Cox suggests her four-step plan that involves goal setting, keeping track of your money, creating a plan and developing habits. But both Cox and Kubin said fun has to be built in, or the budgeting plan will fail. “It’s like dieters that go overboard (without any treats),” Cox said. “You do need to build fun in to take care of yourself.” Here are four simple steps to help start good money management:
step #1:
Determine how much money you really have and where is it coming from.
Whether mom and dad are helping pay for school or a student is on his or her own, the first thing one needs to do is know how much money he or she has.
Over-budgeting can be very detrimental, so if a person rationally figures how much money he or she has for different things, then one won’t have to worry about overdrafting an account or having to pay large credit card bills.
“I mark down on a calendar when everything is due or else I would forget,” said KeeganHill, a junior speech communications major. “I also would suggest to stop spending in advance when the rent is do.”
However, Kubin said budgeting needs to be done in advance, because budgeting from payday to payday isn’t as effective.
“Start to think at the beginning of the year,” Kubin suggests. “This is so that at the end you don’t wind up in debt.”
Both Kubin and Cox said to stay away from credit cards as a source of money, unless it can be paid off at the end of every month. Since there seems to be an unlimited amount of money with credit cards, most students end up in debt quicker this way than any other and create bad credit history, according to an MSNBC.com article by the Today Financial Editor Jean Chatzky called “College budget 101: Get your child on track.”
“Be cautious about using credit,” Kubin advises. “Don’t put on credit that you can’t pay for at the end of the month. Learn how to manage the use of credit; it’s not good and it’s not bad, it’s just a tool.”
step #2:
Make a list of what you need versus what you can live without.
Those $150 heels or that $300 stereo are probably not considered essential things that a college student needs to buy, so it may not be wise to spend this month’s rent on them.
“Don’t be stupid,” said Hal Maddox, a sports medicine graduate student. “People think they need things, but they don’t realize how expensive they are and can’t afford them.”
An important thing that students can do is list what they need to spend money on and what they can really go without.
Cox teaches free money management classes for CCCSNC, and this is what she refers to as “the opportunity cost.”
“If you spend your money one way, you have lost other ways,” Cox said. “It’s all about the little leaks that end up drowning you, and if you had paid attention, you might have been able to save that from happening.”
According to LendingTree.com, when creating a budget, “you don’t want to completely deprive yourself of your favorite treats or your budget will be hard to stick to.” The Web site, which has a lot of helpful ideas on how to better manage money as a college student, also suggests that when budgeting, the four top things that can fi t into either the need or necessity category are: housing, utilities, technology and one’s social life.
In other words, are you able to afford what you already have?
step #3:
Track what you earn and what you spend.
It may come naturally for some, but for others tracking every penny one spends can seem time consuming and boring, especially when there are those easy online reports to use.
“Always check online at least every other day,” said Maren Williams, a junior English major. “It is just to be aware of what you have, so you don’t spend what you do not have.”
An easy answer for students—aside from the Internet—is to write down what they spend their money on. Some people like to keep track of every transaction in a checkbook or through a checkbook software program. The software allows users to analyze their purchases so they know what they’re spending money on and how often.
Another positive aspect to always jotting down purchases is that students can take out what they have to spend their money on—such as rent, car payments and phone bills—so they don’t over spend on unnecessary things before the rent is due.
“You need to keep track of your money,” said Cox about the second step in the money plan she teaches to people. “You need to see where it is going because there are always going to be surprises.”
About.com offers an easy-to-use budgeting sheet for college students under the “Business and Finance: Financial Planning” link. This worksheet helps students track what money they have incoming every month, and then what money they have that will be spent every month. The site stresses in many articles that “a budget is a planning tool that empowers you to handle your money smartly; it’s not financial handcuff s. It helps you plan ahead by knowing how much money you have coming in and going out. It gives you the peace of mind of knowing you won’t run out of money.”
step #4:
Learn to say “No,” and end up saving to enjoy later.
It’s fun to go out and party with friends, but although some may have the budget for it, others may not. Remember: Everyone has a diff erent spending budget, so just learn what others’ limits are.
“It’s about ‘occasionally’ not ‘regularly,’” Kubin said. “You can enjoy life without spending a fortune.”
Individuals can also plan ahead for nights out, which falls under Step 3: budgeting early. Plan ahead for nights out or those desired sales items, then schedule it in that month as an essential item. Savings will start to pile up and the extra money will start adding up.
“Plan what you have to spend money on then see what’s left,” Cox said. “Focus on your needs fi rst, but you do need to build fun into any money plan.”
Always plan ahead; knowing paydays, bills deadlines and monthly expenses will guide you to newfound f nancial freedom.
It may not happen immediately, but once people realize that those $60-nights out caused that larger balance they see on their statement, the need to save will be apparent.
“If you get into the habit of taking out money every paycheck and
saving it, it will pay off ,” Maddox said. “It doesn’t matter where, it
could be under your mattress or in an account, or it could just be for
an emergency, you will then be able to save better.”