©2008 Texas Guaranteed Student Loan Corporation 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, %. 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 money is going

Balance your income and expenses. incomeexpenses

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 expenses Food 13.9% Clothing 5.2% Housing/Utilities 33.2% Healthcare 2.5% Transportation 20.1% Education 4.5% Entertainment 4.8% Charity 2.2% Insurance/Pension 8.1% 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.

Distinguishing between needs and wants

Money Management 101 Needs Groceries Shelter Utilities Phone Tuition Books Clothes Wants Fast food Car Cable TV Cell Phone Vacation Movies/music Designer clothes

Money Management 101 Balance your needs against your income. needsincome

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:

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 good financial 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 questions or comments to To order additional copies, or to request permission to reproduce any of the information provided, please call TG Communications at (800)