©2008 Texas Guaranteed Student Loan Corporation

Money Management 101

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.

$2,748.

14.57%.

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 moneyis going

Balance your income and expenses.

income expenses

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 expensesFood

13.9%Clothing

5.2%

Housing/Utilities33.2%

Healthcare2.5%

Transportation20.1%

Education4.5%

Entertainment4.8%

Charity2.2%

Insurance/Pension8.1%

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.

Distinguishingbetween

needs and wants

Money Management 101

Needs

GroceriesShelterUtilitiesPhoneTuitionBooks

Clothes

Wants

Fast foodCar

Cable TVCell PhoneVacation

Movies/musicDesigner clothes

Money Management 101

Balance your needs against your income.

needs

income

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: www.federalreserve.gov

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 goodfinancial 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 e-mail questions or comments to positive.balance@tgslc.org

To order additional copies, or to request permission to reproduce any of the information provided, please call TG Communications at (800) 252-9743.