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Top 10 Personal Finance Tips for College Students

Personal Finance 101

They understand GPAs and test scores but do they understand their credit score or the value of saving?  The ABA, American Bankers Association, Education Foundation's top 10 tips are designed to give students an edge on mastering personal finance.

1. You are in charge. You are responsible for your finances and you should act accordingly by creating a realistic budget or plan and sticking to it.

2. Watch Spending. You control your money, determining how you spend or save it.  Pace spending and increase saving by cutting unnecessary expenses like eating out or shopping so that your money can last throughout the semester.

3. Use Credit Wisely. Understand the responsibilities and benefits of credit.  How you handle your credit in college could affect you well after graduation.  Shop around for a card that best suits your needs.

 4. Get a Bank Account. Banks are more than money in a vault. They offer valuable services that students can benefit from like check cashing, debit cards, online banking, balance alerts, personal loans, direct deposit, financial education and some offer identity theft protection.

 5. Lookout for Money. There's a lot of money available for students, you just have to look for it. Apply for scholarships and look for student discounts.

 6. New is Out. Consider buying used books or ordering them online.  Buying books can become expensive and often used books are in as good of shape as new ones.

 7. Entertain on a Budget. Limit your hanging out fund.  There are lots of fun activities to keep you busy in college and most are free to students.  Use your meal plan or sample new recipes instead of eating out.

 8. Be particular when it comes to money. Don't just trust anyone with your money.  Be skeptical of classmates, friends or salespeople that have ideas for your money.

 9. Save. Things happen, and it's important that you are financially prepared when your car or computer breaks down or when you have to buy that unexpected bus ticket home.  No matter how small the amount you should start putting some money away immediately.

10.  Ask. This is a learning experience, so if you need help, ask.  Your parents or your banker are a good place to start and remember the sooner the better.

 

Personal Finance Tips for Children

ABA Education Foundation

Anytime is the right time to begin teaching children about money, and the American Bankers Association Education Foundation has tips that can help parents teach money at home.

Helping kids appreciate and understand the value of a dollar.

1. Talk openly about money with your kids. Communicate your values and experiences with money. Encourage them to ask you questions, and be prepared to answer them – even the tough ones.

2. Explain the difference between needs and wants, the value in saving and budgeting and the consequences of not doing so.

3. Set up a chore chart and give your children an allowance for completing their tasks.  Require them to save at least a small portion each week.  The three jars method, one for spending, one for saving and one for charitable contributions is a good way to impart a sense of responsibility.

 4. Open up a savings account at your local bank for your children and take them with you to make deposits, so children can learn how to be hands-on in their money management

 5. Be an example of a responsible money manager by paying bills on time, being a conscious spender and an active saver. Children tend to emulate their parents' personal finance habits.

 

Beginner Budgeting for Every Age

ABA Education Foundation

The best way to reach your saving goal is to start with a budget.  A budget helps you keep track of the money you have coming in – your allowance or Birthday money – and the money you have going out, including spending, saving and possibly donating.  A good way to learn budgeting is to divide your money into four clear jars labeled:  Sharing, Spending, Short-term Saving and Long-term Saving.  The following guidelines will help you decide how much to put in each jar.

1.  Sharing jar: deposit 10 percent of your income, or $1 for every $10. Are you concerned about helping children or animals, protecting the environment or supporting a local food bank?  Choose a cause that you're interested in and donate regularly.  You'll feel good and the charity will benefit from your generosity!

2. Spending jar: deposit 30 percent of your income, or $3 for every $10.This money can be used at any time for small purchases, like a baseball or a CD.  Ask your parents for guidelines on how you can spend this money, and then make your own decisions!

3. Short-term Saving: deposit 30 percent of your income, or $3 for every $10. You may need to save several months for larger purchases, such as a video game or an IPod.  This jar will help you save for some cool stuff!

4. Long-term Saving: deposit 30 percent of your income, or $3 for every $10. This is where you'll save for the future.  Someday you'll want to go to college or buy a car.  These expenses require a lot of planning and saving!

Once your money has started to add up, ask a parent or trusted adult to help you open a savings account at a bank.  The bank will make sure that your money is safe, and they'll even pay you while it's there.  Your local banker can help you open an account and learn more about other ways to save.

 

Steps to Begin Saving

ABA Education Foundation

You've just won the lottery and have your choice of two grand prizes:  $1,000 an hour for 24 hours for 30 days or a penny doubled every day for 30 days.  Which would you pick?  If you understand the power of compound interest, you'd choose the penny.  The first prize would total $720,000, but the second prize would total a whopping $5,368,709.12!  How is that possible?

Invest a little for a long time and you end up with a lot.  Compound interest is just that simple, but to get there you have to choose saving over spending.  It's important that you learn how to save when you're young because that's when you form habits that last a lifetime.  Just like learning to ride a bike, many skills are easier to master when you're young than when you're an adult.  Get started by setting a budget, starting a savings account and making deposits regularly.  Then sit back and watch your money grow!

1. Set a budget: A budget is a plan that helps you keep track of the money that you earn and the money that you spend.  Take a look at our Beginner Budgeting Tips to learn more.

2. Start a Saving Account: Many banks offer kids' saving accounts.  These accounts have no minimum balance and charge no fees.  Your parents or a trusted adult can help you open an account at your local bank branch.  Your bank doesn't offer a kids' account?  Ask them to start one!

3. Make Deposits Regularly: Once you have an account, make sure you use it!  The bank is the safest place for your money, safer than your piggy bank.  Plus, your money will earn interest.  Interest is the money a bank pays depositors, like you, for using your money.

 

 Finance 101 for Children:

Do you think that when your kids hear the words money, savings, finance, and banking, they can join in on the conversation? Where do you start with your kids? How do you introduce the key concepts of money to them while they are young and in a way that they can truly understand?

Well, let’s start with 5 top notch tips to get you started!

1. Communicate! Communicate! Communicate! Open up and talk honestly with your kids about money. Even share your own personal hardships with money. Encourage them to ask you questions, and ask them questions as well to gage their understanding.

2. So, What Is the Difference? Kids need to know what exactly a checking account is and what a savings account is, and why we use them.

3. Allowance Time! Have your kids track and save their allowance from performing chores. Open up a savings account for them, and take them to the bank weekly to make a deposit with their allowance.

4. Start Saving Up Early! Open a savings account with them as early as possible. When they begin grade school, have them fill out their own deposit slips with their own allowance money. This will ensure a deeper understanding of banking from a young age.

5. Set the Example! Parents, you’ve got to set the right tone. Kids notice the littlest of habits. That means paying bills on time, using a savings account, and living within your means.

Beginner’s Savings Basics:

Starting on the right path early with your child can establish life-long savings habits. There are numerous ways to get your child in the habit of saving and understanding saving as a concept in general.

Here are 4 Good Beginner Ideas!

1. Sharing is Caring! Have your child on a monthly basis donate a percentage of her savings from her allowance, like 10% for example, to a charitable cause that interest her. It could be the local pet shelter or children’s hospital.

2. Spending Jar: This is a good one. If you give your child an allowance of $10 dollars per week, make them put $3 in a “spending jar” or piggy bank in the home, and they deposit the rest into a savings account. Before they know it, all of those $3 deposits into the spending jar will be enough to buy a pair of sneakers or go to the movies with their friends.

3. Short Term Savings Goal! You could also encourage your child to decide on an item they want or activity they want to do and set a time line goal to get saved up for it. Like for example, say they want tickets to see the stage version of Glee and that’s 3 months away. Have them deposit $5 dollars every week of their allowance into their savings to save for the tickets.

4. Long Term Savings Goal! Of course your child wants a car for their “Sweet Sixteen” so get them to have the goal of saving up their own allowance to help you make that big purchase or any other major purchase that they for see wanting years down the road. The earlier you can start this goal with them, the better (the interest in their savings account this will generate alone is worth the effort).

 

Steps to Begin Saving:

If your family wins $1,000,000 in the lottery will you be able to sustain long-term growth with those funds or will you spend it all practically over-night? The smart bet is to deposit the lion’s share of that money into a savings account. Putting your money into a savings account will allow your money to generate compound interest, which will greatly increase its overall balance over the course of several years.

Of course winning the lottery is a long shot, but that does not mean that you can’t get a jump start on saving money and sharing those practices with your children.

Follow these easy steps to get started!

1. Open a savings account. It may sound obvious but many people do not have an actual savings account. They just keep money in their checking account and hope they have money left over after paying bills. Find a bank that offers a good interest rate and begin a banking relationship with them. Open one up for your child as well.

2. Set up a budget. Once you open, you and your child’s savings account, create a budget and stick to it. Decide to put a certain dollar amount or percentage of your paycheck into your savings every month is a great and easy way to build up a savings fast.

3. Make deposits regularly. It’s important to get into the habit of making deposits regularly to build up your savings. Making deposits every Friday, pay day, or the 30th of every month, helps you to stick to saving. Plus your children will learn over time the benefits and importance of doing such as well.

 

Is your child ready for a Credit Card?

With the current state of our economy, we have all heard countless horror stories on the impact that credit cards make on your credit score. The last thing you want is your child to get into trouble with credit cards. It can be a tough hole to dig out of, if they do fall into the credit card trap.

The good news is that it is not as easy for teens and young adults to get a credit card anymore. In 2009 President Barack Obama signed the Credit CARD Act of 2009 into law and it was passed by the Senate and Congress. The law requires that anyone under the age of 21 must have a reputable co-signer in order to get a credit card in their name.

This news should put you a little more at ease. However, if your teenager is insistent on getting a credit card, there are a few things you need to consider before giving them the green light.

1. Evaluate your kid’s responsibility level. Does your child demonstrate responsibility with money and other important matters such as classwork and chores without you having to coerce them into doing those things? If so, then they may be able to handle the limits and responsibility of having a credit card.

2. Decide between a Prepaid, Secured, and Unsecured Credit Card. There are advantages to all three.

Prepaid Cards offer practically no risk because you can’t go over on a limit. It almost like having a gift card, but it is a good way to teach your kid about the value of money and how to maintain a running total of purchases.

Secured Cards require a deposit in order for a credit limit to be established. This is a great route to go because if your teen has to invest some of their own money (from their savings hopefully) in order to get started with a credit card, it may make them more aware of the value of a credit card, its limits, and be used sparingly.

Unsecured Cards can offer higher limits and teens may have a Christmas lists of items they have in mind to purchase with an unsecured card. But a word of caution, if your child does not demonstrate the level of responsibility in everyday life that we mentioned before, then this option may spell financial trouble down the road.

3. Monitor your Kid’s Spending. Sign-up for online tracking with your teen and view daily or weekly what they charge on their credit card. Look out for heavy use, and for un-necessary purchases on a credit card like junk food, or movie tickets. Set ground rules for what they can purchase and even a limit that’s at least 1/3 below the limit the credit card company extends to them.

In conclusion, the key is setting terms, conditions, and guidelines with your teen when they use credit cards or evaluating and deciding if not having a credit card is the best idea after all. Just make sure you have frank discussions with your teen on why you have made the decisions that you have made regarding establishing credit.

 

10 Financial Rules for College Students:

You’ve made it to college, and congratulations. Now however, you are a young adult and are responsible for taking care of yourself and managing your money. Here are 10 rules to follow while on your college journey:

1. You are in charge. Create a daily budget and stick to it. No one is going to hold your hand any more to make sure you do what is best.

2. Watch spending. If you have your cell phone bill due on the 15th do not spend money on clothes. Pay your bills first, then have fun with what’s left over.

3. Use credit wisely. Know what all you can and can’t do with your credit cards. Stick to being way under the credit limit they give you.

4. Get a bank account. Banking allows you to store money safely but also offer solutions that will allow you to manage your money well.

5. Lookout for money. From scholarships to student discounts at various retailers and restaurants. There are ways out there that will allow you to hold onto more of your money.

6. New is out. Buy used text books or clothes at second hand stores to save money.

7. Entertain on a budget. Always seek free entertainment activities. Most colleges are full of free things to do for fun.

8. Be particular when it comes to money. Do not just share your financial information with anyone, even roommates or friends.

9. SAVE. Be ready for when things happen that are beyond your control, like expensive text books for example. If you are geared up with a savings account then you will be able to handle these little unexpected bumps.

10. ASK. Handling your finances is a learning process. If you do not know what is the best thing to do for a particular financial situation. Ask your economics professor, or parents, or the personal banker at your bank for help.