Garry Salach, a certified financial planner, gave a lecture Friday about how to smartly budget and spend money as students and as adults.
“One of my New Year’s resolutions was to be more financially responsible,” senior Carly Evich said.
“It helped to come since I got a clearer idea on budgeting and having focused goals.”
Salach highlighted some common signs of financial trouble, such as paying the minimum on credit card balances, missing payments, being surprised by a declined credit or debit card or an inability to pay for emergencies like a flat tire.
“You have to have money set aside, or you will be in trouble,” said Salach. “Having an emergency fund is crucial.”
Budgeting can be empowering as well, according to Salach. He pointed out that it allows one to choose how to live his or her own life and it prohibits others from running their life. It also makes financial decisions a lot easier.
“A common problem I see as to why people stop budgeting or don’t even start is they say it’s too hard,” Salach said. “You have to want to do it, it’s that basic.”
Salach passed out a sheet of paper for students to use in order to plan their budgets.
Salach explained that organizing and planning out a budget by writing it down can help by getting all the information in one place. That way, it’s easier to keep track of fixed expenses like a home or car and excessive spending like alcohol or a haircut.
Salach outlined a method to budgeting. It included a written plan, trial and error, isolating needs and wants, doing it on a monthly basis and developing projections. Basic food needs always come first, and then come student needs like tuition and student loans.
He went into a little detail on student loans. A student cannot declare bankruptcy with this type of loan. Taking control and keeping track is important.
“Students should avoid taking out student loans if they can,” Salach said. “If they have to work a second job then they should. If they have to take out loans, then try to walk away with the minimum amount of loans because it can kill you.”
Evich said she is worried about her student loans.
“I feel like I will always feel stressed, but I plan on attending more of his lectures to get a better idea on how to deal with it all,” Evich said.
Salach shared some statistics on using cash versus credit. He pointed out to the students in attendance that people seem more inclined to spend more money when they use a credit or debit card.
He explained that Dun and Bradstreet consumers spend 12 to 18 percent less when spending cash.
“Cash is better to use than credit. If you don’t have the cash, don’t buy it,” Salach said.
Some ways that people get into trouble with credit is by engaging in overspending or impulsive buying via a false sense of security. That kind of reckless spending can lead to late payments and even spending over the allowed credit limit. Additionally, interest rates can sometimes go from 20 to 30 percent.
Salach also touched on the issue of credit versus debit cards. Credit cards are like loans and debit cards use a person’s own money. Salach recommended using debit cards instead of credit cards.
“Use credit cards wisely,” Salach said. “Try to avoid them if possible, but if you have to use them then don’t let them control you because that’s when trouble happens.”
Reviewing your credit report is always a good idea, according to Salach. One site that he recommended to the audience was annualcreditreport.com because it does not ask for a credit card number.
If a credit report site asks for your credit card, then it will definitely charge you, according to Salach.
A credit score determines whether the person is a good or bad risk to financial lenders. Banks would be more willing to lend money to those will good credit.
One reason Salach encouraged the audience to check their credit reports was so they can prevent identity theft and fraudulent activity with their credit cards.
Goal setting is an important part of budgeting. Salach pointed out that by being in college, students are forced to be goal-oriented. Students make goals to get a good grade, for example, or to reach the next level of class status. It helps students make and reach other goals in life.
“You don’t get anywhere without goals. Don’t be afraid to shoot big either,” said Salach. “A true goal should be S.M.A.R.T.: specific, measureable, action-oriented, realistic, and timely.”
Salach outlined three types of financial goals:
• Short-term goals like vacation, furniture or appliances.
• Mid-term goals like a wedding, a car or a down payment on a home.
• Long-term goals like kid’s college, a vacation home and retirement.
Making these goals helps give one financial empowerment. Having effective money management prevents increased debt, repossession/foreclosure, relationship issues and loss of credit or poor credit.
“I have a huge interest in money management and I believe you can never hear enough about this stuff,” said second year graduate student Naquaina Moore. “Some key things that I thought were
important were taking control of your own money and you should always pay with cash and not credit.”
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