Tag Archives: Budgeting

Freshman Boot Camp: Budgeting Your Financial Aid Refund

9 Aug

One of the mantras told to college students is to “Live within your means”. While it’s good advice to generally follow, it doesn’t get at how difficult it can be to do so while you’re in college. One of the biggest challenges college students face is that their incoming flow of cash tends to be extremely irregular.Budgeting your Refund.png

You might be sitting on a big pile of cash after your financial aid refund comes in, but if you don’t budget it correctly you’ll be broke before the semester ends. So in order to avoid eating exclusively ramen at the end of the semester you’ll want to come up with a strategy for taking care of your money!

As a student, you probably have three potential avenues to get an incoming cash-flow. They are your financial aid refund, a part-time job, and cash gifts for holidays and your birthday. Your parents might also throw something your way once in a while but no one wants to have to ask just because you weren’t keeping track.

Making a realistic budget can be tough but once you know your income it does get a little bit easier. So total up what you’ll get between your financial aid refund and what you’ll get from work. If you know for sure what you’ll get for gifts you can toss that in, but that’s not a for-sure thing.

Next, start by totaling up all of your projected expenses for each month. Aside from obvious things like rent, utilities, food, and other monthly bills you’ll need to include a projected number for having fun. If you know some times of the year like Grand Prix or Homecoming you’ll be spending extra, try to account for that by varying it up by month.

What’s important here is to make sure that your total income is higher than your total expenditures. If it’s not, there’s going to be a big problem.

Assuming the numbers add up, you’ll have a little bit of a strange result. You’ll have your monthly expenditures but your income will be a combination of paychecks and a one-time refund from your financial aid.

There’s actually a surprisingly simple way to be able to make this into a steady income flow without being tempted by the big number in your checking account.

This method is called using a Holding Account. Basically you take the lump sum of money and deposit it into a bank account and set up recurring transfers to your primary checking account on a monthly basis. This way between your income from work and the transfers you’ll be able to pay your monthly expenses without having the temptation to make a big impulse purchase.

If you want to de-automate it a bit, you could actually have them both as checking accounts and write a check from your holding account to yourself on a bi-weekly or monthly basis and deposit it into your other checking account.

This system is not fool-proof but it combines the ability to pay your bills and have some fun while also putting up a small barrier to the full sum to keep you from tapping out your semester’s funds on a whim.

Something to note: make sure that your holding account doesn’t have any fees related to minimum transactions or minimum balance if you can. It doesn’t make any sense to pay one bank to hold your money when there’s plenty of others that’ll do it for free.

If you find that your financial aid refund is going to be much more than you’ll need to meet your expenses and you’re taking loans, it’s worth looking into reducing what you borrow. Remember that not only do you have to pay back what you borrow, you’ll be accruing interest on most loans until the day they are paid off.

6 Easy Money Saving Tips Any Student Can Use

20 Apr

Jim Wang, Wallet Hacks
wallethacks.com

College is a fantastic time of exploration, freedom, and growth.

It’s also a time when many of our habits are formed, especially those about money and saving. These habits can have a ripple effect on your life so solidifying a few good practices today can help you better manage the future.

I have a list of 40+ money tips for college students, which cover the basics like emergency funds and budgeting, but today I wanted to share an extra set of just money saving tips every college student needs.6 Easy Money Saving Tips

Avoid credit card debt at all costs

It’s so easy to charge everything to plastic. Whether it’s textbooks, equipment, or a pizza, make sure that you pay off your credit card bill in full each month.

It’s so tempting to pay the minimum and push the debt off another month, but that will result in you paying hundreds of dollars (if not more!) in interest for nothing. If you don’t believe me, you can use this calculator to do the math yourself and find out how much that $20 pizza will cost you!

That’s money you can use to save for your retirement, for a new car, or your first house. Avoiding debt, especially high interest credit card debt, is priority number one after graduation.

Start budgeting

Budgeting isn’t the most fun thing to do but getting in the habit early is a good idea. When you budget, you have a better sense of where your money is going.

You can use tools like Mint or Personal Capital to help automate the process and when you’re older, you’ll appreciate the wealth of historic information you’re recording now.

Cook more, eat out less

Your studies and your social activities will probably take up a big chunk of your time, so you’ll be tempted to eat out more than you cook if you’re not on a university meal plan.

Resist the temptation! Eating at a restaurant, even a quick service one, is far more expensive than cooking at home. In the beginning, you’ll be terrible at it. Everyone is.

But stick with it and try to cook as much as you can. It’s healthier, cheaper, and you’ll get better the more often you do it.

Take advantage of student discounts

Businesses give student discounts all the time. They know that students don’t make a lot of money and they still want your business, so they’re willing to give you a break if they know you’re a student.

Always keep your student ID on you and ask if a student discount is available – you might be pleasantly surprised.

Use your student loan for tuition only!

Some student loans are deposited directly into your student account and some are deposited directly into your bank account. If you have one of the latter, do not use the money for anything other than tuition and school related expenses.

If you have no other choice, you can use it on necessities but your goal should be to avoid debt as much as possible. Sometimes you don’t have any other options, and that’s understandable, but make sure before you saddle yourself with student debt.

Earn a little cash in your spare time

We all have downtime during the day and on weekends – try to find a way to turn that time into money.

Whether it’s taking on a side gig, earning some cash online through surveys, or something bigger – building a side hustle that earns a little extra money can pay dividends in the long run. There are a lot of sites online that will pay you money for small segments of work, or gigs, and you can easily finish them in 5-15 minutes of down time.

Jim Wang writes about money on his personal finance blog, Wallet Hacks. Get his strategies and tactics for getting ahead financially and in life by joining his free newsletter.

 

7 Things You Need to Think About When Planning a Spring Break

9 Mar

Spring Break leader

With less than a week until spring break, now is the time to get into gear if you are planning a trip this break. While there are several websites available that will arrange packages for you, it is possible to get a great experience without having to pay the premium fees associated with those arrangements.

Planning is the most important part of making sure your trip is one of your best college memories. If you plan properly, you can avoid having to spend your way out of an emergency situation.

Things to think about:

1. Plan on a Budget: With a little bit of searching you should be able to estimate the costs of various things from transportation, lodging, food, and what you are planning to do while you’re there. This will help make sure you don’t throw caution and money to the wind when you first arrive and have to sit in your room because you ran out of money day one. Work with your friends you are going with to make sure it is a reasonable amount for everyone.

2. Traveling Companions: Make sure your group has similar expectations. Mixing friends who want to go sight-seeing at historic places with those who want to party will probably result in the group splitting up for most of the trip. If you all agree on the budget beforehand, then everyone can be ready to pay their own way so you don’t have to help cover someone’s expenses unexpectedly.

Party planning spring break tips.jpg

3. Destination: Beaches and tropical locations are always popular, but don’t be afraid to think outside of the box. Many parts of the country are beautiful this time of year and significantly cheaper than the traditional destinations.

If you’re thinking about international travel, you need to be sure you have your passport. Passports typically take 4-6 weeks to process, unless you want to for expedited service fees to get it sooner. (https://travel.state.gov/content/passports/en/passports/information/fees.html)how you travel spring break tips

4. Planning: Depending on the type of trip, work with your friends to create a list of a few can’t-miss activities and places to visit. This can be during the drive or at your destination. Do some internet searches for tourist attractions in the area since you are, after all, a tourist!

5. Travel Method: The spring break road trip is a classic, and will cost you a lot less than airline tickets would. Just be sure the vehicle you take is reliable. Nothing will derail your plans (and budget) quicker than an unexpected car breakdown.

If you do decide to fly, remember that you will need transportation when you arrive! This means either having someone there with a car, renting one, or relying on public transportation and taxis (which can be expensive).

6. Hotels: While you aren’t traveling to see the walls of your hotel room, where you stay can have a huge impact on your trip. If you’re looking to save money on eating, rooms with a kitchen (while usually more expensive) can save you from eating out for every meal.

When booking your rooms be sure to compare rates not just between hotels, but between booking methods. If you call their front desk, that’s not always a guaranteed best price. There are plenty of websites that may be able to reduce the room rate for you.

7. Food: You may think that you are destined for fast food, restaurants, and gas station food, but with preparation you can save a few dollars on food and still eat well. If you have a long trip, you’ll need to eat in the vehicle. Grocery stores are full of food to eat on the go, but don’t buy anything that needs refrigerated. You can’t refrigerate anything so it needs to be okay without and that leftovers are mostly a no-go. Don’t worry too much about bringing food to last the trip because your destination will have grocery stores (the locals do have to eat). Be sure to pick out foods that fit your situation. If you’re relying on a microwave for cooking tailor your choices toward that.

Smart Money Moves for your Internship Paycheck

7 Mar

Nathan Carmany, a Purdue Alumnus, is a Certified Financial Planner for Watermark Wealth Management

The spring semester is underway. Companies are recruiting and having conversations with
your professors about ideal candidates. You attend networking events, purchase new interview clothes, and hopefully land the perfect position for the summer. To stay ahead of your finances, you need to make a conscious plan for your earnings.internship txt crop.jpg

  1. PAY HIGH INTEREST RATE CREDIT CARDS 

The average balance for a college student in 2013 was $499. The average interest for student credit card interest is 13.42% stated as an APR, however, the effective rate after compounding daily is actually 14.34%. What better way to cut expenses than eliminating high interest obligations?

  1. CREATE A SPENDING PLAN

Consider creating a spending plan for the summer and school year to stretch the duration of the funds. Paul Arden stated, “Don’t look for the next opportunity. The one you have in hand is the opportunity.” Think about what opportunities you may put into your own hand with a well thought out spending plan.

  1. PAY FOR YOUR SUMMER CLASSES

Don’t overlook that your credits for the summer internship can cost money. Why not use some of the funds to possibly pay for those? Reduction of your total amount borrowed before interest is capitalized and recommended for faster loan payoff.

  1. PREFUND YOUR LIVING EXPENSES

Seniors, set aside as much as you can. When you find your first apartment or home, somewhere the move will create an unplanned expense. Inevitably it happens, an extra day rental on the moving truck, needing kitchen utensils, towels, or boxes. The money will help cushion for the unplanned expense. Do not forget about the extra cost of hooking up utilities, cable, or the internet.

  1. BUILD AN EMERGENCY FUNDgraph spending plan final.jpg

Traditional financial planning calls for 3-6 months of living expenses set aside for an emergency fund. Most people will experience at least one significant financial emergency in a three to five year period. It can be difficult for college students to save a full 6 months of living expenses, but setting aside a modest amount may prevent you from making a call to your parents when something comes up. Like my grandmother taught me, place the money in a zip lock bag and freeze it in a container of water, then see how easy it is to impulse spend!

  1. CONTRIBUTE TO A ROTH

The sooner retirement savings start; the less you have to save over the rest of your life. The compounding of gains and interest early on are difficult to make up if you delay contributing until later in life. By saving it in a Roth IRA, the earnings are tax free after age 59.5, as long a Roth account was opened 5 years ago or longer. That 5 year clock begins with the first contribution to your Roth. If you need access to the money, contributions are removed first without any penalty.

  1. PAY DOWN STUDENT LOANS

Hopefully, you have been informed about the inability for most borrowers to ever declare this type of debt in bankruptcy and that prolonged periods of missed payments will lead to wage garnishment, a much larger loan balance, and the destruction of your credit score. The grace period on most student loans expires 6 months after graduation. Interest is capitalized (meaning that it is added to the loan balance) at that point unless you qualify under a different exemption. Paying down unsubsidized loans (make sure your loan servicer allocate it properly) with your earnings before the end of the grace period is a great way to cut the overall cost of the loan.

Wrap Up

Think about your upcoming needs for the summer, school year, or beyond graduation. Pick one of the ideas to best suit your needs and work on an implementation plan. No matter which idea you execute, a well thought out plan will serve you well.

Being Social on a Budget

27 Jul

Raysha Duncan, Financial Aid Administrator
www.purdue.edu/mymoney

table with coffee mugs; text overlay: being social on a budget

In college (and in life in general), people want to do things and they want you to do things with them. However, when you’re on a college student budget, and just want to make sure you can afford Ramen next week, this can get really overwhelming! But, you don’t have to stop hanging out with your friends just because you’re on a budget.

Your friends want to go out to eat?

If you just can’t say no, see if you can pick the place. Pick something where everyone either splits the bill for one BIG entrée (like a pizza!) or go somewhere with cheaper meal options. But, if your friends pick a place outside of your price range, make sure you opt for water (free!). As for food: get an appetizer, see if you can order a smaller portion of an entrée (lunch portions are generally cheaper), go vegetarian for the night (typically cheaper options), or just order dessert!

Your friends want to hit the mall?

If you have issues with impulse spending, don’t go. Even if you leave your wallet at home, you’ll see things that you’re tempted to buy and come back for them later. Offer to meet up with your friends later if you know you won’t be able to stop yourself from spending money. If you think you won’t be tempted to spend any money, go with them and be their personal stylist for the trip. Just remember two big things: 1) don’t make them spend more money just because you’re not spending money and 2) don’t judge them for spending money just because you can’t.

Your friends want to take an expensive weekend trip?

First of all, don’t be a mooch…that’s just tacky. Be open and ask how much the trip will cost, then take some time to determine if you can make room in your budget for it. Be honest with yourself on how much you’re REALLY able to spend on a weekend trip right now Where else in your budget will you have to make sacrifices? What funds will you need to tap into to afford this trip? Is this a good way to spend your hard-earned cash? Do you really want to go…or is fear of missing out (FOMO) motivating you?

If you go, stick to your budget: bring your own snacks for the road and your stay, drink water with dinner, don’t give into impulse purchases, bring something to do for nights in, etc.

If you don’t go, then find something free and fun to do while you’re home for the weekend. Go out and volunteer, read a book, go for a walk…do something and don’t just sit around all weekend while they’re out having fun. You can have fun too!

These are just a few examples, of course. There are many more ways that you’ll feel pressured into spending money. Just remember: you have a budget for a reason. You’re living like a college student now, so you don’t have to live like a college student later.

 

How do you manage being social on a budget? Let us know in the comments below!

It’s Time to Review Your Budget!

29 Jun

Raysha Duncan, Financial Aid Administrator
www.purdue.edu/mymoney

close up dollar bills

So, back in January you read our blog post on budgeting, created your own budget and have been dutifully following it since…right? But what’s in that budget? And why is it budgeted for that amount?

Consider this list of questions as you review your budget:

When was the last time you reviewed your budget?

Is everything listed in your budget still relevant?

Are there any reoccurring expenses not included or that you need to remove?

Are you budgeting your ‘fun money’? If not, why not? If yes, are staying in that budget? Does your ‘fun money’ allotment need increased or decreased at all?

Are you setting aside money for a big savings goal? Why or why not? If you’re not, can you think of a goal that you can save up for?

What’s sucking money from your budget? How can you fix that?

Is there a portion of your budget that you’re just not spending money on anymore? Where’s that money really going?

Where can you cut back to put more towards your big savings goal?

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Do you have any other tips of things to consider as we all review our budgets this month? Please share in the comments below!

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