Money Management 101
Five things to tell your students about handling their finances
Submitted by Sam Casarez, TG Account Executive

Here's some sobering news about consumer debt: Americans owe more than $3 trillion to banks and creditors, an amount that surpasses the annual federal budget. Much of this bill comes from high-interest credit cards. Consumers can find themselves straining to meet the large sums needed to repay these kinds of loans. Even worse, their debt burden could threaten their future financial well-being.

The best way to prevent such a situation is simple enough: Practice fiscal responsibility early on. However, knowing how to be financially smart and following that practice takes some learning. As someone who works in financial aid, you understand better than others how important it is that students know the principles of good money management and how vulnerable they may be to using credit cards. Luckily, you can help your students set and follow a pattern of responsible budgeting. In so doing, you safeguard their financial future and even contribute to a healthier economy.

The five rules
Consider offering the following general guidelines to new or returning students. You can incorporate this material into training you provide your students, or add it to any campus-introductory publications you send to them.

• Establish and maintain a spending plan: Budgeting basics are the foundation of strong financial management. Teach your students how to determine expected monthly income and expenses, set categories for expenses, and track those expenses from month to month. A balanced checkbook means success; ongoing deficits may require a closer look at purchases and impulse buys.
  
  
• Distinguish between financial needs and wants: Perhaps for the first time in their lives, your students have to make judgments about what constitutes a "need" or necessity and a "want" or luxury. Values and lifestyle play some part in determining what is what. There are ways to reduce expenses and increase income, which can give a student power to get more of what he or she needs and wants. Getting a roommate, shopping at thrift stores, and taking a part-time job are all options for increasing spending ability.
  
  
• Minimize debt: A financial basic is to borrow conservatively, that is, don't borrow the full amount if you don't have to. Earning potential plays into this: What can the borrower hope to earn and how does this measure up to expected repayment? Also, credit cards are especially tempting during college. There are various strategies for mitigating credit card debt, such as limiting use to one credit card and paying off balances each month.
  
  
• Keep good financial records: A good way to plan for future expenses is to keep copies of old receipts. At the same time, it's smart to track what has been paid and when in case problems occur.
  
  
• Invest in your future: Setting up a savings account starts a pattern of good money management, especially if the student sets aside cash on a monthly basis. A savings account is also an investment of sorts, one that provides a nominal return according to an interest rate. Teaching your students the basics of interest rates helps to prepare them for investing in other ways in their financial future.

To learn more
If you’re looking to find books on effective money management, you’ll find a large range of literature on the topic. Here are a few suggested titles:

• The Total Money Makeover Workbook by Dave Ramsey
• The Money Book for the Young, Fabulous & Broke by Suze Orman
• Money Management for Those Who Don't Have Any by James L. Paris

Sam Casarez is an Account Executive with TG serving schools in TASFAA. You can reach Sam at (800) 252-9743, ext. 4655, or by e-mail at sam.casarez@tgslc.org. Additional information about TG can be found online at www.tgslc.org.