Money Managing money is an important aspect in a person’s life. In the book Managing Your Money: All-in one for dummies by Ted Buena, he mentions a great scenario of how you should treat money where he states, “Just as you have relationships with people in your life, you also have a relationship switch money– how you earn it, spend it, lose it and save it. ” A disadvantage that we have in today’s society is that schools are not equipping our students well enough with the knowledge of how to manage money.
I strongly believe that this knowledge of money management should start in high school so that our students are better prepared when they get to college. In Scott Gamma’s article, College Students Lack Money Management Skills, Gamma states the fact of “Millions of students graduate from high school and head off to college with barely any financial knowledge. ” Based on my friends’ and my own experience this is true. Students are getting into debt early stage in their life because they have never learned how to manage their money properly.
The earlier you are taught about finances the better the economic situation you will find yourself in the future. I would eke to share some insight with you all of what I have learned in regards to money management that I hoped will be as helpful to you as it was for me. Most importantly, Budgeting is the first step to learning how to manage your money. It is a guide that helps you focus on your financial and become stable. If you don’t budget how much you are spending than you will not know if you are spending more or less. Students lack on budgeting and spend more instead of saving.
They do not know how to control their money, but by budgeting this will help lead to a solution. The first step f budgeting is creating two lists of your necessities and your extras of that month. Add both lists separately, and then subtract your monthly income from your necessities. If you have money left over, then you subtract the rest from your extras. If your total is negative, you need to cut back in your spending. If your total is positive, you’re in great shape financially. If you don’t have an income, and your parents are giving you money every month, then use that as your income.
Next is having self- control with your money by limiting your purchases. For an example, instead of archiving coffee every day at Dunking Donuts for two dollars, save money and make coffee at home. In USA Today’s article it states “Students might think a cup of coffee every morning is not much. But $2 a day can add up more than $700 a year. ” Another strategy to cut spending is when you are going out; only bring twenty dollars with you so you won’t have the incentive to purchase more than what you can afford.
For example, in the book Early to RI$e: a young adult’s guide to saving, investing and financial decisions that can shape your life by Michael Stall states “l keep approximately $20 in my wallet. Only when I go out with the intent of spending do I put more money in my wallet. You can’t spend what you don’t have on you. ” When you go out only carry with you a certain amount of money and do not exceed carrying more unless you absolutely need to. Remember, creating a budget is all about knowing your budget and not spending over what that set budget is.
Persuasive Speech By Rosalie-Marie Keep in mind that having a savings is the second step to learning how to manage your money. Students lack the urgency to save money and instead spend most of it. According to USA Today of young students, 40% don’t have a savings account. Most that do not save end up in debt because they didn’t save money to help them pay their bills on time. First you must create a savings account because they have higher interest than checking accounts that result in gaining more money.
After creating a savings account and knowing what your budget is, you can now establish how much you should save. In Stall’s sample, if you have a 5% interest on a savings account and you put in as little as ten dollars weekly; in 1 year of savings; you will gain $532. 96, 5 ears, $2, 952. 26; 10 years, $ 6,742. 58; and 20 years $17, 865. 55. Before you spend, pay yourself first by putting money in your savings account. This is your emergency account where you use it only if you need it, by paying for a car, paying bills, and etc….
As long as you are saving money in your account and not withdrawing money out, you will be in a good financial situation in the future. Next let’s discuss about credit cards. They are the easiest and fastest to use when purchasing. By using a credit card you do not have to worry about how much money you have in cash or in our debit card. This sounds pretty good and carefree but it really isn’t. It is like taking out a loan because you are borrowing fake money that you don’t have at that moment and will have to pay it off later.
Most students who are not familiar with how credit card works don’t know how to use it wisely. Spending more than what you cannot pay back can result into getting in debt. Most students come to college not knowing the real use of credit cards and a credit score. Scott Gamma states that, “increasing numbers of college students are getting into financial trouble by using heir credit cards during their college years. 50% of college students have 4 or more credit cards and over 80% of students fail to pay off their credit card bills. ” Failing to pay off your bills can affect your credit score.
Credit scores are scores you gain from paying or not paying your credit card bills. Credit scores are with you for your whole entire life and it affects your credit actions from the day you signed up for a credit card and on. A bad credit score can affect renting an apartment, buying a car, getting insurance, and also your Job. A landlord checks your credit score to know whether or to you are able to pay your rent on time. At your Job, some companies look at your credit scores to determine if you are a trustworthy and reliable candidate.
Recent research shows that “employees with credit problems are significantly less productive on the Job than employees without. ” Having a good credit score is by paying bills in full and on time. To avoid being in debt or having a bad credit score, you will first need to ask yourself if you really need a credit card at this age. If you have a debit card, I advise you to use it more often than using a credit card. (Add in arsenal experience) Even though debit cards don’t keep track of your credit history, you will not be in debt like credit cards.
If you need a credit card and you purchase your items with it often, limit the access of using it. Instead, use cash or a debit card to purchase items and make at least one small purchase monthly with your credit card and pay it off in full to gain credit score. One good purchase to make with a credit card is buying gas monthly, since you already have money to purchase gas every month why not use it? Another secret is that you want to check different credit art companies for the lowest interest rates, which are the balance that you have not paid in full after the grace period with extra charges.
Again, limit the access of using credit cards because you don’t want to be in debt in your early twenties when you want to buy a car and rent an apartment. Lastly, avoid using credit cards to purchase items that you cannot pay back in the future. In conclusion, it is important for young students from high school up to college to learn how to manage their money wisely. Creating a budget is the first step to manage money by separating your necessities ND your extras and comparing what you are spending more on. This results in cutting back and becoming financially stable.
Keeping a Journal and recording what you have purchase will make you realize how much you are spending in one month and also to be more in control of what you’re purchasing. Secondly, is saving. If you save money in your savings account, this will bring you to a better financial standing in the future. If you do not save and spend it all, you will soon be in debt, or not be financially stable. By putting at least ten dollars weekly in your savings account thou withdrawing any money out of the account can help you after you graduate when you want to purchase a car, and also pay your bills on time.
Lastly, limiting the usage of credit cards will reduce debt in your early years. Remember, credit cards are Just like loans, you borrow money and you will later have to pay it back. Do not purchase items with a credit card if you cannot pay it back. Instead, you should purchase a small item monthly to build up a good credit score. Remember, if you are good to your money, it will be good to you. If you follow these steps, you will be in good outcome financially in the future.