*Republished from the February 2017 issue of The Kayseean
By Alexander Brumlik
College opens many doors and offers countless opportunities but brings with it many responsibilities; at the forefront, being accountable for your money. For many students, this is both a newfound freedom and a newfound risk.
Let’s talk about two smart and easy things you can do to help yourself.
1. Make a Budget and Stick to it.
I recommend downloading an app like Mint, an Intuit product, from the guys who bring you TurboTax.
The app is free, and it advertises itself as a money manager. It will help you create a budget, help you track expenses, make nice little graphs so you can easily see where you are spending your money, allow you to track and pay your bills (such as utilities or a Verizon bill) by linking your checking account, and lastly, enable you to keep an eye on your credit score. I think this is a great feature. I know when I started tracking my credit score, I became better informed and took steps to improve my credit score. When I was your age, my credit score was lousy. No one explained to me the importance of a good credit score and why I should value my credit score as a young person. Now, my credit score is excellent.
“A budget tells us what we can’t afford, but it doesn’t keep us from buying it.”
Having a good credit score matters. We all know that our credit score influences how much we pay in interest on car loans and credit cards. But did you also know that many apartment complexes base rent on it, and many employers use it as a way to determine how responsible you are? You would hate to miss out on a job opportunity because you were late on your phone bill one too many times.
2. Buy in Bulk and Pay off Your Credit Cards.
Purchasing goods in high volume is often cheaper – think Sam’s Club or Costco. “The money you save by investing in bulk will provide a better return on investment than any investment vehicle on the planet”[Mark Cuban said on NPR in 2013.] The general principles are that you often get a per-unit discount and save on transaction costs such as driving to the store. Also, by turning your cash into products, you avoid inflation.
Inflation is the general tendency of products to increase in price over time. Sorry, the Econ professor in me can’t avoid talking about inflation, which was 1.7% last year. That’s not high, but how much was your checking account paying? Wells Fargo, one of the largest banks in the world, offers a Premier Checking account that only pays 0.01%. That’s 0.0001! And they only start paying that interest on balances of over $500. So if you put $500 in their account, at the end of the year, you would have gained a whopping 5 cents. You’ve likely heard it before: “don’t just pay the minimum payment on your credit cards.” Unlike, checking accounts that pay you almost nothing on interest, the typical interest rate on a credit card is 20%. Even small charges can take a long time to pay off.