Hello! I hope you had a nice weekend and enjoyed yourselves. I played some PAC-12 Alumni softball and only managed to strike out once…and made a trip to Target–one of my favorite places. We brought home a new storage unit and a DIY project that may or may not make an appearance depending on how well it goes.
It seems that since last Monday there has been some moving and shaking in the world of college affordability and financial transparency.
On Tuesday, Veep Biden met with 10 college presidents to include a “shopping sheet” as part of college admissions packages that “simplify the current process of comparing colleges. It would clearly state the cost of a year of classes, the student’s net cost after grants and scholarships, financial aid options to pay that cost and estimated monthly payments for federal loans. It would also provide information about the colleges’ retention and graduation rates and the share of graduates who default on their student loans.”
Hopefully, other schools which catch on and make things like this standard practice.
And I can pretty safely agree with Thomas F. Cooley when he says “Clearly the best way to protect consumers is to educate them.”
That’s what the Consumer Financial Protection Bureau (CFPB) was created to do. If you have access to a phone or the internet you can receive financial advice, information, and clarification on anything from banking fees to mortgage payments and credit card debt.
Now that there are some resources there, how do you go about promoting financial literacy? How many teenagers and young adults and older adults really want to sit down and take a hard look at their finances? I mean, it’s a tough thing to look at and realize that getting that Big-Gulp sized coffee every morning is costing you more each month than your monthly commute. It’s hard to create a budget, in the first place, and then stick to it.
But, I think that’s the first step.
I found these templates from Nelnet and Google Docs that can help get you started. First, keep track of what you normally spend. And the most important thing is to be honest with yourself. You have to be willing to record those impulse buys and hold yourself accountable otherwise you’ll never really know what and, more importantly, where you’re spending your hard-earned moola.
Once you get a look at what your money is going towards you can start prioritizing what to spend on.
Of course you have fixed expenses like your rent/mortgage, utilities, and insurance but then there are those expenses that can vary greatly from month to month like your groceries or gas/transportation. Then there are your “wants” like clothing,travel, entertainment, booze, eating out, TV/Cable, etc. After tallying your monthly totals, here are few things to consider:
1. You should be spending less than what you’re earning. If you’re in the red each month, you should take a look at your budget and start making some adjustments. Even the smallest change like eating out one night less a week can make a big difference in your budget.
- Tip: Try to pay for things with cash or your debit card. It’ll force you to rethink your purchases. It’s always tempting to swipe your CC because it may seem like you’re spending less but it will continue to add to your debt that you’ll have to pay interest on. And who wants to pay interest on the at $3 block of cheese you bought?
2. If you are spending less than what you’re earning you have a few options. You can put it in your savings or you can pay more than the minimum on your credit card or student loans payments thus saving you some money in the long-term by reducing the amount of interest you’re paying over the life of the loan. Or a mix of both.
3. Be flexible. A budget is meant to be a guideline not a live-or-die by standard. Some months you’ll splurge on a new outfit or a trip (Although, it cannot be called “splurging” if you do it every week. That’s called “denial.”) but as long as you’re being mindful of your spending, paying down your debt–not adding to it–and putting something away for a rainy day, everything will turn out alright.
What budgets have worked for you? What advice would you give someone just starting out? What do you wish someone had told you about budgeting?
Comment below or email firstname.lastname@example.org or tweet @doogencreates
*Note: I’m not a professional financial planner. These are things that I have culled from my own experience and learning. Take what you will, leave what you don’t want.*