TRANSCRIPT: Financial Literacy: Smart Money Skills For College & Beyond
Speaker: Danielle Champagne
Learn the Lingo
Hello, my name is Danielle Champagne and I work with college students across the country to learn about personal finance matters and how to be successful with managing your money.
What we're going to do today is talk about personal finance, and the top ten tips to be successful with your money while you're in college and beyond.
Our first tip is to learn the lingo. Well, what does that mean?
Most people are really intimidated by personal finance, and they hear the word “finance” or talk about money, and they sort of shut down.
What we want you to do is treat it as terminology and a new language.
With that, what we need you to do is study just like you would for your classes, look and understand what something means.
So if you're talking about financial aid, or you're talking about interest rates or financing a particular item, what we want you to do is really understand what that means.
And, the best place to go always is the Internet. Everyone’s online anyway, grab your computer and start searing personal finance sites.
There’s lots of Websites, there's news articles, there’re blogs out there.
And a lot of them are really written for the normal person.
You don't have to have a degree in finance or be a math whiz to understand how to manage your money.
What you have to do is be determined and know that that’s important for you for your success.
Get Organized
Step two, get organized.
Where do you start when you're assigned a paper or a project or homework with your classes?
Well, first you have to figure out what’s going on, what is the assignment, what’s the project.
And then you have to figure out an outline to actually accomplish that project by the due date.
We treat finances very similarly because you really do need to understand what your financial picture looks like.
Now, every single student is going to have a different scenario.
Maybe you're away at college or university and you're living in a residence hall.
Maybe you're still living at home.
Maybe you come back to school and you're trying to finish up a degree while working and managing a family.
No matter where you are, organization really is key, and it's always the first step for students to understand where their money goes, what it means to be responsible for their money, and how to manage it the best way possible.
What we look at with that, first of all, is to get it down in writing, whether that's electronically on your computer or with a planner or calendar that you use for your assignments, get it down.
Get it out of your head because it starts to get jumbled up and mixed up with too many other things that are going on in your lives.
We're all busy, and that’s understandable, but getting that down really can help you out.
What we suggest is to include all of our bill due dates, to include when you're getting your paycheck, if you know how much your paycheck’s going to be, or if you're using financial aid to cover your expenses.
Put that down as well so that you know the money coming in and the money going out, but tie that to the dates that you have when things are due.
Financial Appointment
The second component of being organized and getting organized is to set a financial appointment for yourself.
Now, this is a new concept for a lot of people, but I think it's really important, and I actually even do this in my personal life.
Every week I set aside 20 – 30 minutes to look at my budget.
I look at my bank account, I look at my financial calendar to know when my bills are due.
And then I really just plan out, either that next week, that next month, if I'm looking at planning ahead for the future, maybe a vacation or a special event that’s coming up, that’s what I look at at that time.
What I always suggest with a financial appointment is to set it at a particular time during the week, not on the weekend.
That’s important.
Put it in your calendar because you really want to make sure that you do it.
But don't but it on the weekend because that’s your time.
That’s when you see your friends, your family, you're catching up on everything else, you're doing your chores or your laundry.
Don’t try to manage your money at the same time.
Put it during the week when you already have class and work and you're already busy, and thinking about all those responsibilities in your life.
When we look at that financial appointment, what we're trying to do is really make sure that you're setting aside time when you're not distracted that you can think about your money, think about the things that are important to you, what’s coming up, where are you going as well.
With that financial appointment, it doesn't have to be long.
As I said, mine’s only 20 or 30 minutes long every week.
And sometimes it's even shorter.
But it's a time where I can stop, reflect and think about where I've been and where I’m going
Set Financial Goals
Number three, set financial goals.
Now that we know the lingo, we know where we're going as far as a calendar and organization are concerned, now we start actually thinking about the specifics.
What’s important to you today and tomorrow.
And what we look at with financial goals is to take it a step beyond what most people think of as a goal of I’d like to save money or I want to spend less money.
That’s not good enough, unfortunately, with personal finance.
What we're looking at is for your goals to be SMART
Some people have heard of that acronym, SMART.
What it means is Specific, Measurable, Achievable, Realistic and Time-oriented.
Well, what does all that mean?
It means be specific. It means get to the details.
Not just I want to save money, but what does that mean?
I want to save a particular dollar amount from every paycheck or I want to have a particular goal in mind.
If you want to go on a vacation someday, and you know that that’s going to be in six months time, it's going to cost you $300, what does that mean between now and then?
Well, clearly it means you have to save $50 every single month.
How often do you get paid? Well, you get paid twice a month.
That’s pretty common for most college students, most people in general.
So, what does that mean? $25 from every paycheck has to go towards specifically saving for that vacation.
And what we look at with those SMART is to make it definitely reasonable for you, and attainable and achievable so it can't be something that’s crazy.
No one’s going to save $100,000 in a year while they're in college.
They're spending that much money on college.
What we're trying to do is to make it reasonable but not too easy.
Saving $1 every paycheck, is that going to get you anywhere? No.
And that’s okay.
We want you to balance that out.
Also, look at what short-term or long-term means to you.
As I said earlier, you have today to look at and tomorrow to look at.
And for every student, it's going to be a little bit different.
If you're graduating this semester, you're looking at a very short timeframe before your life changes a lot.
If you're a freshman, it's going to be a lot longer for you.
So understand what it means for you for short-term. That may be the semester or this year.
Long-term may be a little bit longer, maybe the next year after that, it may be two or three years from now
That’s okay.
Everyone’s timeframe is a little different. What makes sense to you is important.
Short-Term Goals
Now, I want you to take a look at the sample financial goals worksheet up here on the screen.
Think of one particular financial goal that you have right now.
Write it down, but make sure to make it SMART.
Evaluate Your Lifestyle
Number four, evaluate your lifestyle.
What we mean by this is to look at where you are and to set reasonable, realistic expectations for yourself.
If you're living off of our financial aid or other loans to pay for school, can you afford to buy a new car?
Do you have to get your hair done every single week? Probably not.
What we really want to talk about with college students, no matter where you are in your college career, is to understand why you are where you are, and that transitionary period in your life is exactly that.
It's a transition.
You won't be this way forever. You won't struggle with your finances forever.
But what you really have to do when you don't have a lot of money coming in, or you're going into debt in order to get your degree, is to evaluate and be honest with yourself.
What are your needs but what are your wants.
And categorize every piece of spending that you do as a want or a need.
Build Your Budget
Number five, build your budget. Well, what do we mean by a budget?
Really, a budget is a spending and saving plan, so what we want to look at is what money is coming in, what money is going out.
So, if you know your income because you have a set salary or set wages every single pay period, that’s going to be easy.
If it's something where you just work hourly and your hours shift every single week, it’s going to be a little more difficult.
That’s okay.
What we want you to do is just project out. Look at the past couple of months.
How much have you been bringing in?
Do you know that it's a holiday season and you're going to be working extra hours?
Or perhaps it's spring break and you aren’t going to be working as many hours.
Plan ahead for that.
And this is the time to use your financial appointment to your advantage and look at what money is coming in, what money is going out.
The money coming out really is looking at all the different categories for you, so we're including those needs and those wants in every single aspect of your spending.
Now, don't forget your savings.
What we're looking at with savings is, again, is that part of your financial goals, is it something that’s realistic for you?
But put it down in writing how much you will be saving.
What is that plan?
Track Your Spending
Number six, track your spending.
You’ve spent all this time setting up your goals, getting organized, having a plan.
If you never do anything with that plan, you're never going to achieve anything.
So, what we want you to do is to take a new approach and to track every penny that’s being spent in your life.
When we look at tracking, that’s actually the third tab on your budget sheet that you have time to download, and what we look at is every single category of spending and every single day of the month.
With that, every day that you spend money or you get money, what we want you to do is record it and put it under that particular day and that particular category.
That allows you to see where your money really is going and then where in the month your money is being spent because we tend to cluster a lot of spending together.
Now, with that tracking, of course this is an electronic version.
If you're out and about, and you know you're not going to have a computer with you or your phone with you that you can track that, perfectly fine.
Write it down somewhere.
If you have a little note pad in your pure or your pocket, some people actually put a sticky note inside their wallet next to their debit card or next to their cash so that they can jot that down really quick while they're at the store so they don't forget.
I always recommend tracking every single day.
If you’ve spent money or received money that day, put it down before you go to bed.
Because what we tend to find is the second you fall asleep, your receipts all disappear.
You don't know where the money went.
You can't remember once you broke that 20 what happened to it.
So put it down before you go to sleep.
Review Regularly
Number seven, review regularly.
We've done a lot of work so far with planning, with tracking, but really the third step has to be reviewing.
So when we look at your budget, it's not just what you thought and what you did, but how you can make it better.
So, what we want to do is to, during your financial appointment with yourself, set that time to review your budget and review your spending.
What’s happened?
Were you great this week?
Were you not so great this week?
And make sure that you're really focusing on improvement, no matter what.
It's okay if you make a mistake. It's okay if you forget to track.
But what we want you to do with that review time is to acknowledge those mistakes and work on trying to make it better for yourself.
Use Credit Wisely
Number eight, use credit wisely.
Perhaps you’ve already started building your credit history, or perhaps you have yet to.
That’s okay.
Wherever you are, we want you to be as smart as possible about your credit.
Now, this is a really complicated topic with a lot of information.
But what I want you to do today is just take away a couple of important points so that you can start learning later on more specifics, depending on your particular situation.
With credit, always understand that it's not a crutch. It’s a tool.
It's as a tool for you to build a better financial future and to be able to achieve more and bigger goals later on.
But it's not a crutch.
It's not something that you can use anytime you want however you want.
Just because you want something doesn't mean that credit should be the way that you pay for it.
When we look at using credit wisely, what we're really trying to understand is what are the rules for credit.
And when we look at rules, we have to know what the game is.
That game is what's called your credit history and your credit score.
Now, what we've put on the screen is a series of components with your credit score that you can understand those rules.
When we look at those rules, we're looking at what does it really mean.
So, what is important?
Clearly the stuff that’s on here: paying your bills on time every time, not charging too much on your credit cards, building a long steady financial history, looking at different types of credit so it's not just that you have ten credit cards and nothing else, and then, looking at using new credit every so often.
Now, if you're in school and you're financing your education through loans, you're automatically building in new credit.
Because every time you get a new loan, you're getting a new hit on your credit that can actually be beneficial for you.
So, don't worry about that. Now that leads us into the next step though in dealing with debt.
Avoid Debt
Number nine, avoid or eliminate debt.
Well, there are really two camps of people: those who don't have debt and those who do have debt.
We want to address both of those issues with you today, depending on where you are.
If you're one of the lucky people who don’t have any debt, we want you to continue to avoid it.
And what we're looking at with avoiding debt really is following three simple rules.
First of all, if you incur debt, pay it off as soon as possible.
Don't let another billing cycle go by where you're carrying your balance.
Number two, make sure that you're budgeting for every expenditure that you have, and that you're saving a good amount of money because we want to make sure that if an emergency arises, you're looking at the ability to be able to tap into savings or an emergency fund instead of having to do to the credit card.
Number three; make sure that you do not carry your credit cards with you.
If your credit cards are in your pocket, you're going to use them.
It's just too tempting.
In our culture, to go out shopping and not use that card because you're going to find something you're going to like, and that’s okay.
But if you can't afford it, you can't afford it.
Eliminate Debt
Now, if you're in the other group, you’ve already incurred debt and you're working on paying it off, well first of all I applaud you for acknowledging that it's important to pay off your debt.
But what we need to do is come up with a plan for you.
Now again, everyone’s particular situation is very, very different.
But what I want to give you is three rules to begin with to really start following and take to heart.
First of all, you have to stop incurring new debt.
If you're someone who charges with a credit card, get them out of your wallet.
Keep them far away from you.
Don't use any new debt, no matter what.
Number two, work out a plan for paying off your debt.
Figure out, using your budget, your financial goals and your spending tracking information how much you can really afford to pay off each month on your particular debts.
With that, we actually recommend creating a snowball effect on your debt as a method of repayment.
Now, there's going to be an attachment at the end that you can download with very specific instructions for your snowball because it's very complicated.
But with the charts and the information we're going to give you, it's very simple to actually set up that plan.
It's up to you stick to it.
The third piece you can do is to seek out help.
Clearly, something has been going on in your life that’s a little bit out of your control.
Maybe it’s you really liking to shop.
Maybe it's that there’s a particular financial or health emergency.
That's okay.
Whatever the reason, we want you to just move forward with it.
Don’t beat yourself up about your problems and the issues that you've gone though.
Look ahead.
Look forward because tomorrow is another day that you can make the best decisions possible.
With that, ask for help.
It's okay to not understand.
It's okay to not be sure what plan is best for you.
But you want to seek out the advice of someone that you trust that’s also unbiased, that’s not trying to sell you something, but instead trying to educate you and help you become debt-free.
Plan for the Future
And finally, number ten, plan for the future.
No matter where you are in your college career, your post-college life, something is going to change in your life.
You're usually in a transition period for most of your life.
And what we want you to do is think about those transitions and how you can be as successful as possible.
This takes some reflection and some thought. What's your next step in life?
What’s your next goal?
Perhaps it's moving on to a university or looking at graduate or professional school.
Maybe it's going out into the real world and becoming a working professional.
Maybe it's really transitioning into that next adult phase of your life and starting a family buying a home, planning longer, larger vacations.
What are those things that are important to you that are coming up next in your life
Using these ten tips can really allow you to get a grip on where you are, understand where you want to go, and then navigate that path into the next period of your life.
What we're looking at really is the bottom line.
And the bottom line for you is that financial success begins with financial responsibility.