Money management strategies can reduce stress for students
Tuesday, August 2, 2005
MANHATTAN, Kan. - College students who are juggling classes, homework, school activities and a social life often end up working at low-paying jobs just to make ends meet. Yet, even students who are counting their pennies can use money management strategies to reduce financial stresses.
People who have a limited amount of money often can reduce debt - and save, said Carol Young, Kansas State University Research and Extension family financial management specialist.
A dollar a day can add up faster than some people think, she said.
Young added that students may make one or more of these common mistakes: not tracking their money, not saving and not using credit cards wisely.
Tracking money helps people see where their money goes each month, she said. It also helps them see how much they spend on items that they don't really need.
A checking account is a good way of both tracking money and planning a budget, Young said. With a checking account, it is easy for students to keep a record of the money they spend. But, they'll still need to keep a record of cash spending to have an accurate tracking system.
After tracking expenses, it's time to plan a budget. After setting and following a budget, students can have extra money each month to put in a savings account for emergencies, vacations, or a new car. Young said that many people who don't have an emergency fund end up using credit cards to pay for emergencies.
For college students, having a budget is a good way to manage their money and know how much they need to set aside for bills and groceries every month. This is where tracking money comes in handy. Students need to be able to see what they spend their money each month before they can correct the problem areas, such as nonessential items.
"Credit cards can be a really effective tool if used responsibly, but they can also make it easy to build up a lot of debt quickly," Young said. "They are good for planned items or emergencies, not things like groceries. If people can pay off their credit card every month, then they are probably using it responsibly."
A debit card can be used in the same ways as a credit card, but is limited to the amount of money in the owner's checking account, Young said.
Debit cards work well for parents who want to give their child a credit card for emergencies, but are worried that he or she will use it irresponsibly. With a debit card, the child can't add up a lot of debt, and the money charged won't acquire interest and won't need to be paid back later.
More information on managing money successfully is available at the local K-State Research and Extension office and on Extension's Web site: www.oznet.ksu.edu. Click on "Home, Family and Youth" and search for "Basic Money Management."