Tuesday, February 3, 2015

Numbers Don't Lie: Personal Finance

Once we enter the "real world" life will change dramatically. Many of us will face student loans, a job search, apartment hunting, and planning for a way to get around. As Ferris Bueller said, "Life moves pretty fast. If you don't stop and look around once in a while, you could miss it." 

It's common for college students to overlook the importance of personal finance. Did you know that some employers require background and credit checks to assess a candidate's financial practices? In this post I will explain some personal finance terms, which can help college students be more fiscally responsible.

What is Credit?
We've all seen the catchy commercials for freecreditscore.com? What exactly is a credit score? I asked the experts, aka Google, for their insights. According to Personal Finance at Duke, your credit score is a number invented by bankers in order to rank your financial history. The number designates your reliability in paying back loans, calculates your potential interest rates for loans, and assesses your ability to apply for loans. Your credit score is effected by several factors including your credit card, student loans, and your spending habits. This video created by Daily Finance explains this further, while also stressing the importance of building "good" credit.

"Make your own budget!"

Importance of a Budget
As a college student I agree that creating and adhering to a budget is probably last on your list of things to do. Between classes, homework, career development, and extra curricular activities it can be tough to find extra time in the day. But the advantages of simple budgeting practices can go a long way in generating good habits for the future. A great exercise is to guess where your money goes in a given month, then to actually track your payments and see where your money really goes. A great website to help you do this is Mint.com. It categorizes your purchases and shows you, in percentages, where you're spending your money, while monitoring your debit and credit card accounts. Not only does reviewing your budget increase awareness of your spending habits, it also makes you more likely to change and plan ahead!

Save! Save! Save!
What are we saving for? We're broke college students, right? But let's analyze that - how broke are we really? Some of us have part-time or work-study jobs, while others get some spending money from our parents, right? But where does all that money it all go? If you're like me, it goes straight to your iTunes account, but I digress. Practicing saving is something you will do your entire life, so why not start now and get a leg up on the competition. Open up a savings account or set up an automatic deposit from a portion of your paycheck to go to savings!  According to Forbes, developing good habits during college can help you better navigate the real world. So start saving now!

"Save up now for the future!"

Having debt is no good, right? But it's inevitable for a majority of students. College is expensive!  Understanding and planning ahead for how you are going to pay student loans after you graduate is proactive.  Millennial Personal Finance highlights several ways to organize your finances and suggests how to make extra money through "side hustles." For example one writer advertised simple crafts on Etsy, resold used video games, and wrote her own blog. I'm not suggesting you start your own business, but finding a "side hustle" that works for you could help ease financial pressure and provide some extra cash.

Simple Steps
Here are some simple steps toward organizing your personal finances:

  • Open a savings account
  • Understand the interest rate on your credit card
  • Build "good" credit by paying bills on time!
  • Find the bargains!
  • Create a budget (Use apps like Mint.com, YNAB, or Budget Simple)
  • Find a side hustle or part-time job
  • Practice saving!
"Follow these simple personal finance steps!"

Go forth, my young grasshoppers, on the road to personal finance responsibility! Making sure your personal finances are in order before applying to jobs is a good first step toward adulthood. Strive for a credit score as pristine as your resume! 

I hope you enjoyed the Juno double snow days. Back to work!

Carpe Diem,
Nicole Brooks
Class of 2016