Imagine this scenario: You’re at your local grocery store, and after picking up the essentials — and a few non-essentials — you get in line. The cashier rings up your items and you slide your credit card. To your surprise, the machine beeps, signaling an error. More shoppers line up behind you with their judgmental stares as the cashier says, “I’m sorry, your card has been declined.”
You over spent your limit, and you’re embarrassed. But don’t worry — many people have been in that awkward situation. According to the Experian College Graduate Survey in 2016, 31 percent of college graduates who owned a credit card had maxed out a card, and 23 percent of college graduates had experienced a declined card.
This is why financial literacy or money management is important. Everyday, poor financial management skills drain millions of Americans of opportunities to pay back their loans, travel, buy homes or invest in their retirement. It’s easy to overspend money in college, but try hard to not let it happen to you. Here are a few quick tips on how you can improve your money management skills:
SAVE BY LIVING FRUGALLY
I’m not asking anyone to completely abandon life’s luxuries. However, I am a firm believer that tiny adjustments to your daily spending habits can save you a lot of money. For example, if you like to start your day with a cup of coffee, try brewing at home. If you’re a Starbucks fan, consider buying their VIA Instant pack at your local grocery or Starbucks store. For ten dollars or less, you can make up to 12 cups of coffee. If you enjoy the movies, rent a flick on Redbox or visit the theatre on a Tuesday. If you are a member of AMC, Cinemark or Regal theatres, there are discounts on tickets or food on certain days. A basic membership with either of these brands is free! You should also prowl the bulletin boards around campus for student discounts at the zoo, museums or performances in the area. College is short — enjoy these benefits while you can!
MAINTAIN A BUDGET BY PRIORITIZING NEEDS OVER WANTS
Have you ever entered into a store with one thing in mind, but left with more than you needed? A crucial part of managing money is learning to prioritize needs over wants. Your needs are the things essential to your daily life, while your wants are the non-essentials — the impulse purchases. For example, how often do you spend lounging as compared to working, being at school or in another professional setting? Perhaps you may want to skip the graphic tee for an item that may help you stretch your wardrobe. Say you are trying on clothes in a fitting room. When deciding whether or not to purchase an item, consider not only the fit or the price, but also if it’s a need or simply a desire. Think: Do I need this item right now? Do I have something in my closet just like it? How will it help to enhance the wardrobe I already have? Can I purchase it later? You’ll find this tactic incredibly useful for maintaining your budget.
If you haven’t done so already, make sure to open a savings account along with a checking account. A savings account will allow you to accumulate money overtime and help you build a credit history. This way, when you are ready to buy a car, major appliance or apartment, the seller will see that you have an account, that you have tried to save and that you have — hopefully — managed it well. If you need to withdraw money from the bank, always ask for a balance — you’ll be able to see where you are financially, if something is missing or use it to encourage you to save more. Remember: Anything major taken out in your name like a student loan will show up on a credit report. You can receive a free copy of your credit report every 12 months at AnnualCreditReport.com.
FIND OPPORTUNITIES TO LEARN ABOUT FINANCIAL LITERACY
Unfortunately, many Americans lack money management skills. In fact, a report from the Financial Industry Regulatory Authority foundation found almost two-thirds of Americans can’t pass a basic financial literacy test. Money management skills like saving, budgeting and investing are imperative in leading a sustainable adult life. Therefore, one should seek opportunities to learn about financial literacy. Find a book on Amazon about financial goal setting or savings, or consider taking classes either in the community or on campus that offer finance management information.