College, a time for savings

Many college students may wonder where to start when it comes to managing finances or saving money. With time and an array of resources for students, taking the first step to financial management is an easy one.

Financial professionals from the Texas Tech Department of Personal Financial Planning and Tech’s financial literacy program Red to Black, discuss how college students should manage their finances to begin saving for the future.

Whether students organize their finances during college or preparing for graduation, it is important to start with a plan and stick with it to achieve established goals.

“The earlier you start a savings program the more likely you are to develop good habits, and hopefully those habits will be something you carry forward in financial situations,” Chris Browning, an associate professor of personal financial planning, said.
Financial saving habits formed while young can provide a skill set that will increase human and financial capital for future hardships and milestones.

Saving While in College

With seven out of 10 college students admitting to being stressed about their finances, according to the National Student Financial Wellness Study, many students might doubt they could ever begin to build habits saving money while in college.

“The habit is more important than the dollar amount,” Browning said. “Saving systematically with a plan makes it a lot easier to continue with the plan to establish a habit.”

Saving money for college students may not seem practical with the rising costs of tuition and books throughout the nation. However, the importance of saving is not in the size of savings, or capitalizing on it, but instead importance falls in the establishment of a logical and life-long habit.

Students that attend Tech have access to Red to Black, the No. 1 college financial literacy program in the United States, according to Red to Black offers peer-to-peer financial coaching to Tech students.

By providing students financial coaching, Red to Black aims to empower students with knowledge to reach their financial goals, according to its website.

Through Red to Black students, can create spending plans to track income and expenses which allows students to understand how to better save money.

“Money is just a utility to fund the goals and things you want to do in life,” Jacob Gurock, a student assistant with Red to Black, said. “Getting in the habit and building the foundation of financial wellness early is really important and that foundation starts with tracking your income and expenses.”

Most college students might focus on the present benefit of their money, instead of their financial future. But by taking advantage of resources provided by Tech and establishing a budget, students’ can learn how to build financial wellness.

Planning for Graduation

The benefits of saving can be life changing, however, with approximately 40 percent of college students paying for more than half their tuition with student loans, according to the NSFWS, these pay offs may seem far in the future.

“I think the best thing people can do is equip themselves with information, there is not a substitute for a good plan,” Browning said. “As you approach graduation, if you have student loans you should really understand the grace period and how it will affect you financially, incorporating this into your budget early will allow money for future relocation or housing cost.”

A grace period is a waiting period or time after graduation before repayment of a student loan is to begin, according to the U.S. Department of Education.

For most student loans, a grace period is six months, with approximately 1.4 million student loans currently being in a grace period, according to NSFWS. Students who do not create a plan for dealing with student loan debt after college often find themselves at odds with the government or potential employers.

When entering the job market, graduates should work hard to identify what type of job that they are looking for, then identify where they want to live and the opportunities for their selected careers in that area, Browning said.

By creating a plan before job searching, an individual can have assurance in finding a job that fulfills financial and personal needs well into the future.

Another way to prepare for the future is to build credit while you are young. This allows for lower interest rates and eventually access to a home mortgage.

“A great way for students to build credit is to get a secured credit card and maybe just use it for groceries and gas, use it for expenses that you know you can pay off having looked at your spending plan,” Gurock said. “A secured credit card requires a deposit for collateral.”
Students who need to build credit can use secured credit cards with a required deposit, providing crucial experience in credit card usage and money management.

Savings, a Personal Investment

Although 50 percent of students worry about being able to cover monthly expenses, less than 19 percent have met with a college financial advisor, according to the NSFWS.

“I am aware of the financial services on campus, but have never had to use them” Connor O’Brien, a senior sociology major from Panhandle, said. “I track my spending with my banking application.”

Misconceptions of how to manage finances have long plagued communities, but with current resources and technology, most students have a chance to control their finances and not let their finances control them.

“The longer your time horizon, the better off you are generally going to be, but I will say the longer you have the habit of saving, the better off you are going to be,” Browning said.

If students do not have the habit of saving as a college student, even some amount of money, taking advantage of future financial opportunities will become burdensome.

If a student can prepare themselves financially and go into things with a plan, they will be better able to avoid interference and lead themselves on a plan to financial success.

Tech students who find themselves in any financial situation where they need advice are reminded to use the free services provided by Red to Black.

“The overall importance of being financially prepared is the recognition that there are going to be a lot of things coming at you,” Browning said. “The better you can plan for the changes, the better you will be able to manage those things.”

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