M.A.S.T.E.R. Plan participants who attend this session will be able to:
Produce and utilize monthly financial budgets;
Employ money saving strategies;
Discuss the benefits and drawbacks of employment while taking classes full-time;
Recall the services offered by the Office of Student Financial Assistance;
Evaluate the value of obtaining a credit card.
“The Price is Right!” papers
Dry erase marker or chalk
Pencil and Paper (students should have with them already)
In the last few days, you’ve learned a lot about living in the residence halls, sharing a room with your roommate, and you probably think you’ve got this whole college thing figured out, right? Well let’s talk money. Tuition, books, lab fees, affiliation fees, housing, meal plans….college takes money. Sometimes it’s borrowed money, sometimes its hard-earned, 30-hours-a-week-on-top-of-going-to-school money. We’re going to spend the next 60 minutes or so to talk about dollars and sense; not the coin kind, but the kind of sense that’s going to help you make smart decisions that will help you secure your financial freedom once you graduate. Let’s start with some Q&A, shall we?
Do you control your money or does your money control you?
How many of you have missed out on fun social engagements or experiences because you simply couldn’t afford them?
How many of you have checking accounts? Debit cards? Credit cards? Savings accounts?
How many of you spend your money based on a monthly budget you’ve created for yourselves?
Hmm. Most of you say you don’t follow a monthly budget when spending; however, we all budget to a degree. If I gave you $25 you would immediately start thinking how you were going to spend it.
What would you spend it on? (ex. $15 on dinner, $10 at the movies)
Well, that’s budgeting; looking at how much money you have and allocating it to your needs.
Activity: B is for Budget
Ask for a volunteer to come to the board. Ask the volunteer to provide you with the amount of his or her monthly paycheck. List this amount at the top of the board, then ask the volunteer how much he or she spends monthly on the following items: classes, books, school supplies (i.e. pens, notebooks, binders, highlighters, etc.), housing, cell phone, car, car insurance, car maintenance (including gas), parking, food, clothes and shoes, and entertainment. Subtract each of the listed amounts from the running tally based on the monthly paycheck amount (in most cases the monthly paycheck won’t be enough to cover the costs listed). How many of you have experienced this? You get paid and a couple of days later, all of your cash is gone and you have nothing to show for it; maybe some new jams on your iPod, or a couple new shirts, but other than that, you have no idea where all of your money went. Your phone bill arrives in the mail, and you have to spend next week’s paycheck just to cover the cost!
Don’t stress! There are a couple strategies you can employ to help keep you out of the red:
Create a budget. Start with your monthly income, the amount of money you have to spend; be sure to include any financial aid money you receive, money you have in a savings or checking account, or allowances given to you by your parents. Next, just like we did on the board, on a piece of paper, estimate your monthly expenses and assign amounts from your income to be spent on tuition, books, school supplies, housing, cell phone, car, car insurance, car maintenance (including gas), parking, food, clothes and shoes, and entertainment. If you’re not sure how much money to allocate to each of these things, spend one month tracking your spending. Save every movie stub, every receipt; if you spend $1.00 on a drink from the vending machine, make a note of the expenditure. At the end of the month, record your expenses, or use a checkbook ledger to reconcile your purchases. This process will not only help you create a personal budget, but will help you identify spending habits you can change to help you save money!
Modify your spending habits!
Reduce or eliminate unnecessary expenses. Start by asking yourself some difficult questions, “Do I really need another pair of metallic, strappy sandals?”, “What else could I purchase with this $4.23 I’m planning to spend on an Iced Caramel Machiatto from Starbucks?” Sometimes, your answers will result in purchases, sometimes they won’t. The important thing is that you’re thinking critically about your spending.
Shop around! Compare brands and prices! Many off-brand items (like Equate and Great Value items) contain the same ingredients as their name brand equivalents (although sometimes in different amounts). Now, you may prefer to buy certain name brand items (I mean a “cheesy puff” is not the same thing as a “Cheeto”), but you may be able to save money on other items by buying the off-brand version. Let’s play a little game to illustrate this point….
Activity: “The Price Is Right!” Game
The purpose of the game is assist students in recognizing how much money one can save with smart shopping. To prepare for the activity, simply pull up the Price is Right PowerPoint slides. Ask for a volunteer to “Come on down!” to play “The Price is Right!” The student is to determine which of the pictured products is cheaper and by how much.
Here are a few other ways you can continue to live the same lifestyle and save an extra $25 a month:
Get water with lemon instead of a soda when at a restaurant
Go to a matinee instead of a night showing
Buy a box of candy bars at the grocery instead of buying one at a time from the vending machine
Drive home one less time a month
Purchase used textbooks
Don’t forget every time you swipe your debit card, you’re spending cold, hard cash. It’s easy and convenient to use your debit card when making purchases; they’re widely accepted, safer (you have to know your PIN to make a transaction), and you never have to worry about having enough cash to cover the cost. However, sometimes we forget that with every swipe of our debit card, cash is being deducted from our checking account.
Keep track of your spending by enrolling in online banking or by collecting and keeping receipts for purchases made with your debit card.
Watch your spending closely; if you find you’re spending more money due to the convenience of a debit card, withdraw a certain amount of cash each week to be used for certain purchases (i.e. withdraw $50 a week to be used on non-meal plan food purchases); withdraw no more that what you’ve budgeted—tell yourself, “once the money is gone, it’s gone.” Spending cash often will result in more thoughtful purchases and you’ll see exactly how much you’re spending.
Be aware of overdraft fees! You, most likely, incur an overdraft fee ($20-$30) any time you spend more money than you have in your account. Using your debit card repeatedly for purchases and neglecting to reconcile your purchases with your account ledger, can result in overdrafts.
When making a withdrawal from your checking account at an ATM, be sure to use one of your bank-sponsored ATMs to avoid additional fees!
Be careful when withdrawing money from an ATM (automated teller machine) with your debit card.
Only use ATMs in enclosed spaces or well-lit areas.
Visit ATMs with groups of friends or use them at a popular time.
Be aware of people around the ATM area.
Put your cash into your wallet before exiting the ATM area.
Look for ways to supplement your income!
On-campus Employment: Many on-campus departments have student worker positions. The perks of working on-campus include: close proximity to work, a deeper connection to WKU, on-the-job experience that is directly linked to your major/minor, and a supervisor who is invested in your education (on-campus employers are much more likely to work around your class schedule and breaks)! Exploring on-campus employment is easy!
Start by ensuring you’re eligible to work on-campus: you must have a FAFSA on-file and be enrolled part-time. Verify your eligibility with Student Employment (through the Student Financial Assistance office); some on-campus jobs require you to be work-study eligible.
Complete a Student Employment Application. Once processed, you’ll receive a listing of all available on-campus jobs. You’ll need to contact Departments to collect information about, and express interest in specific positions. You may be asked to complete an additional application.
If you’re successful, and hired for a position, you’ll need to complete tax paperwork (have your Social Security Card and/or birth certificate).
If you’re an international student, you’ll follow a similar process, but will need to complete additional paperwork through the Office of International Student and Scholar Services (OISSS).
There are opportunities all over campus to get a job, even in the places you live. Some of on-campus jobs include positions in Housing and Residence Life, DUC, Dining Services, the library, the Preston Center, and many others!
In fact, the Career Services Center will be sponsoring a Student Employment Fair this fall. Be on the lookout for fliers!
As an on-campus, student employee, you’re viewed as a student first; therefore, you won’t be eligible to work more than 20 hours a week.
Off-campus Employment: Working off-campus may be an option for you if you need to work more than 20 hours a week to cover your costs, or if you’re unable to obtain employment on-campus. However, there are a couple things to consider before applying for that job at the mall:
Forty-two percent of students working greater than 25 hours a week admitted that work negatively impacted their grades (King and Bannon, 2002).
Students who work full-time are also more likely to drop out of school. For example, the available evidence is consistent with a roughly ten percentage point differential in graduation rates between full-time and part-time workers.
Working 20 hours per week increases the likelihood that a student drops out after his first year by 3.2 percentage points for four-year college students (Ehrenberg and Sherman, 1987.)
If you decide that working off-campus is essential, ask critical questions of your potential employer: will s/he be able to give you the number of hours you need, will s/he schedule your hours when you’re not in class, will s/he be flexible in scheduling during mid-terms, finals, etc.?
Check out the Career Services Center; Career Counselors are on-hand to help you write your resume, cover letter, and find that perfect off-campus job. They can even help you practice your interviewing skills in a mock interview. Access TopJobs through the Career Services website to post your resume for local (and out-of-state) employers to view!
You can also learn about job openings through The Daily News Classifieds.
Remember being a college student is a full-time job! You’re here to obtain a degree, and graduate. Don’t lose sight of your goals!
Take stock of your assets! An asset is something that’s convertible to cash; your greatest asset is your ability to make money and your ability (knowledge, skills) is dependent upon your education. Think of college expenses as “good debt;” your college degree will improve your ability to make money, and you’ll make more money as a result of college education than you would without it.
Another asset is your financial aid package. Visit the office of Student Financial Assistance and spend some time with a counselor asking specific questions about your financial aid package, with the aim of better understanding the types of financial aid you’re receiving and what will happen with those loans, once you graduate.
Loans: money that must be paid back, with interest
Scholarships, grants, and fellowships: money that does not need to be paid back
Residual Checks are a form of assets. Once all of your tuition, fees, residence hall, and meal plan costs are paid, any extra money in your budget will come to you in the form of a residual check. This is not free money. Rather, it is extra money from excess student loans or scholarships that did not need to be used for the current term. If it comes from loans you will have to pay it back once you graduate. The money from residual checks should be spent to cover educational costs.
What are some examples of items that could be considered an educational cost? (Books, supplies, computer, additional lab fees, etc)
What are some examples of items that would be difficult to justify as an educational cost? (Pizza, vacation, car, clothing, etc)
Besides spending the residual check what are some other options? (Put it in the bank. It could accrue a little interest, or you could use it for a later semester in case tuition goes up or you lose a scholarship.)
Something to remember is that unexpected money moments can occur at any time. What happens if you lose your scholarship and do not have the monies to make the difference in the tuition costs? If you would have saved that Residual Check, chances are you could have made a payment.
Feed the Pig! Open a Savings account! Who can tell me about “The Rule of Three?” (a student will probably reply with, “The Rule of Three states that you can determine the number of sexual partners a person has had by dividing the stated number by three.”). Interesting response, but I was referring to the Savings Rule of Three: you should keep about three months worth of expenses in your savings account at all times. If for some reason, you incur a large expense (car repair, car tires, emergency airplane ticket home, etc.), you’ll have enough money to pay it off, and still pay all of your bills on-time, and without additional strain on your finances or charging the expense to a credit card. Once you graduate, you should keep six months worth of expenses in your savings account. If you need a new job, it can take up to six months to find a job with a comparable income.
Every month, “pay yourself” 10% of your paycheck and put it into savings. Make this the first expense you pay; if you wait until the end of the month, you won’t have any money to put into savings.
Don’t dip into your savings for things you want, but don’t need. If you have to dip, skinny-dip!
Understand the power of savings: if I were to offer you $1,000,000 cash right now or $0.01 that would double its amount every day for 30 days, which would you take? Day 2: $0.02 Day 3: $0.04 Day 4: $0.08… Day 28: $1.3 million Day 29: 2.6 million.
Remember: Whether you get your money from an on-campus job, student loans and scholarships, or family, being able to budget wisely can help you get more bang for your buck.
Credit Cards: BUY NOW AND PAY LATER
We’ve talked a lot about income, budgeting, and savings. Let’s talk plastic! How many of you have or have had credit cards? How many of you who have had credit cards have cards in your own name (not mom or dad’s)? What are some of the benefits of having a credit card (build credit history, which you’ll need when buying a house or a car, security in emergencies, learn independence and responsibility)? What are some of the dangers of having a credit card (high finance charges and interest rates)?
Activity: True or False?
The average college student enters college with $1,100 in credit card debt, and graduates from college with a balance of $3,300. TRUE
If you make only minimum payments of $66.00 on a credit card bill, you’ll eventually pay an additional $200.00 for each month when you pay off the bill. FALSE: You’ll eventually pay an additional $614.00 for each month when you pay off the bill IN TEN YEARS!
ONE credit card can do all the things that TEN credit cards can do. TRUE: Ten credit cards can get you into 10 times as much debt. Having one credit card to use in emergencies is enough. The fewer the cards, the fewer the bills – meaning, less debt you will be accruing. In fact, having ten or more credit cards can actually hurt your credit score, even if they’re unused!
The truth of the matter is…
When you use a credit card, you're borrowing money from the credit card company to make a purchase. You'll receive monthly statements that list the charges and request payment on this "loan." The payments are monthly versus a college loan, for example, that you can pay over an extended period of time. The minimum amount on a credit card balance is about two percent of what you actually owe. When you only pay the minimum amount your debt will continue to grow at an interest rate of 12-19%; some credit card companies also charge late fees.
A credit card isn't free money. You should only charge what you can afford to pay back. Credit cards shouldn't be a money substitute for items you can't afford. If you feel like you need a credit card to start up the credit history or for emergency issues consider…
Getting a Student Credit Card that has a limit; for example some banks offer a student credit card with a limit of $300.00
Asking your parents to give you a credit card of theirs with your name on it. You can make the payments on what you charge to it to them, and it gives you the practice of making payments and choosing what you buy, responsibly. When you think you can handle the payments- go out and get your own credit card.
Only getting ONE. You can receive all the same benefits from one card that you can get from ten cards.
Getting a credit card that can be used in multiple places versus a store credit card.
Using the credit card for one thing only: gas, groceries, books, etc.
Many credit card companies will send “Automatically Approved” mailings to you to get your first credit card. And many stores will also try to get you to apply for a card in the store to save the additional 15%. With this in mind it is important to find the right card. Look for credit card companies that can supply the following:
Low interest rates and finance charges
Low or no annual fees
Grace periods (no payments due until charges are posted)
Possible reward programs that could save you money
If you start to realize that your are over-spending, or cannot find means to pay the bills- cut the credit card up or call the credit card company and have them cancel the card. You can also call them with questions about your bills and for help with payment schedules.
Buying now and paying later may be fun. It may also be a good way to get the things that you want and can’t afford at the time; but chances are if you can’t afford them now- you will not be able to afford them in the near future either. A credit card is a great tool for a person who controls their money. It gives them more flexibility to make purchases. However, when you start seeing pizza or Halloween costumes on the credit card bill you may be overstretching your means.
F-R-E-E, that spells FREE, credit report dot com, baby!
If you do decide to get a credit card, check your credit score once a year. There are three major credit bureaus TransUnion, Equifax, and Experion. You can get a report directly from them for a small fee, or sign up for a watch dog program that will provide you with credit reports as part of their paid service.
If you are ever denied credit, you are entitled to receive a free credit report at that time.
Protect your identity!
Be sure to shred all documents that list your personal information (especially Social Security Number). Don’t take the bait; be on the lookout for phishing scams! Sometimes people will solicit personal information from you, or ask you to verify passwords, via e-mail in an effort to steal your identity. Your bank will NEVER ask you to verify this information over e-mail. If you receive such an e-mail from “your bank,” call your local branch and ask about the validity of the request. Just as with e-mail viruses, if you don’t recognize the e-mail address, don’t give out your personal information! Watch your wallet! Make sure none of your credit cards are missing.
If you think your identity has be stolen, you can call one of the three credit bureaus and they will put a fraud alert on your account, notify the other two agencies, and send you a free credit report to check for suspicious activity.
Improving your Financial State
With all the topics we’ve gone over, there are a few ways to positively alter your financial state while here at WKU.
Don’t give away your money due to stupidity: Parking tickets, room keys, ID’s, leaving your room door unlocked (people can go in your room and steal stuff), or to restitutions from disciplinary hearings.
Parking tickets range from $20 to $100.
A lost room key is $25 to replace.
A new ID is $20.
Keep track and carefully watch of your belongings. Buying things once can be costly; buying them twice is a waste of money.
If you’re found responsible for vandalizing your residence hall or causing damage to residence hall walls, furniture, etc., vandalizing another student’s belongings, you may be asked to pay restitution to the department, university, or owner.
Take advantage of the free stuff.
Many campus offices and organizations sponsor all kinds of events that are free to students. Go to sporting events, CAB movies, recitals, hall programs, etc. They are a lot of fun, get you out of your room, and don’t cost you a dime.
Apply for scholarships.
WKU Scholarships Western Kentucky University offers a variety of scholarships to qualifying students including Merit Scholarships, Tuition Incentive Program (TIP), Departmental Scholarships and Alumni Grants. You can qualify as a returning student, they aren’t just for freshmen.
You can find out what scholarships are offered through WKU, the application criteria, applications, and related deadlines through the Office of Student Financial Assistance’s website, phone, or e-mailing, email@example.com.
Make sure you are aware of the application deadlines and turn all materials in on time.
In addition to scholarships offered directly through WKU, the Office of Financial Assistance’s website offers links to non-University related scholarships and information on how to ensure this money is sent to your WKU account.
Between the WKU scholarships and the hundreds offered through other companies, organizations, and civic groups almost all students can find some sort of additional scholarship to apply to. While these may or may not cover all of your tuition, they can provide much-needed extra money. Three hundred dollars a semester could make a difference between peanut butter and pizza or provide extra gas money.
Remember to complete the FAFSA each year.
FAFSA--Free Application for Federal Student Aid
In order to receive Federal financial aid (grants, loans, federal work study) a student must complete a Free Application for Federal Student Aid (FAFSA) or the Renewal FAFSA each academic year. The easiest, fastest way to file a FAFSA or Renewal FAFSA is by using FAFSA on the Web, www.fafsa.ed.gov. When you file online, your FAFSA will be processed within one to two weeks, as compared to four to six weeks for a paper FAFSA. If you prefer to file a paper FAFSA you can obtain one from the Office of Financial Assistance (from Office of Financial Assistance Website).
Make sure the site you go to is a .gov site and not a .com site. Some .com sites will charge you for an application.
By listing Western Kentucky University (Title IV Code: 002002) on your FAFSA, they will receive your information electronically for award processing.
Complete your application as soon after January 1 as possible. Since some aid programs are awarded on a first-come, first-served basis, an early application receives priority consideration for limited funding sources (from Office of Financial Assistance Website).
If you have questions or need instructions for completing your FAFSA the Office of Financial Assistance’s Website contains guides in both English and Spanish. This page also contains links to information on Federal loans, loans and scholarships in general, the process of how your money will arrive at WKU and what steps you need to do to aid that process, and links to needed forms.
An important note about your FAFSA: most of you are dependents for FAFSA purposes—not necessarily claimed on your parent’s taxes, but a dependent according to the government criteria. You will need your parent’s tax information. If you are going to file taxes you will need this information also. Since some scholarship money is based on a timely filing of the FAFSA, make an effort to file or have anticipatory information early in the process. If you feel you have extenuating circumstances which would override your dependency this form can also be found on the same webpage.
If you have questions about your FAFSA or any related processes you may contact the Office of Financial Assistance.
Go to class!
Based on the cost of in-state tuition for the Fall 2011 semester ($4236) with a course load of 15 hours for the semester… For every class that you skip, you are throwing away $17.65. If you skip one class a week, regardless if it’s the same class or a different one each time, you are losing $282.40 of your semester fees. You cost yourself even more money if you fail a class, and have to pay to retake it!
Get the most for your money!
You pay the same price for 12 credits that you do for taking 18 credits. Focus your time and stay on the higher end. Taking only 12 credits each semester results in you being at college longer, thus more money spent on loans, and more time that you aren’t making a paycheck. An extra semester at Western is $4,236 ($10,500 non-resident) plus a loss of income of $7,000 that you would have made if you had a $28,000- a-year job.
Final Note: Keep a budget, maintain your credit score, work on building your savings, and maximize your free money opportunities. Being aware of your financial health now can make a big difference in your future!