Student expenses: how to budget

The resumption of in-person classes and some extracurricular activities, along with more take-out food options on campus, means that Hopkins students have more and more opportunities to earn and spend money this time. fall. However, managing finances can be a new experience for many students who are spending their first semester on campus.

For advice on staying on a budget, using credit safely, filing taxes, and more, the Hub turned to Mia Russell, lecturer at the Whiting School of Engineering Leadership training center which teaches courses in business, communication, leadership and finance. Russell has over 20 years of experience in business and finance, most recently as vice president for financial education and philanthropy for youth financial health at the Wells Fargo Foundation.

Do you have any tips for students who might be developing and staying on a budget for the first time?

A good approach to developing a realistic budget is to have a good understanding of where you are actually spending your money. Start by tracking your spending for the first two or three months on campus, look at all the ways you spend money, and then categorize it into large compartments, whether it’s accommodation, food – to. both groceries and restaurant meals – communications (cell phone / internet), entertainment, medical / health and other expenses. Once you get a feel for how you’re spending your money, you’ll be able to create a more realistic budget that you can follow. I think of a budget – or a spending plan, which is a nicer way to put it – as a way to help you achieve your goals, not a limiting tool.

What free tools do you recommend students use to create a budget or track their spending?

There are many tools for personal financial management (PFM). A few free options include Mint.com, Mvelopes, Budget Simple, and You Need a Budget. In addition to helping you create a budget, many PFMs consolidate your accounts, allowing you to see your financial situation in a more complete and holistic way. Some financial institutions, such as PNC Bank’s virtual wallet, offer similar platforms. It is also very important that students exercise due diligence on security, privacy and other regulations regarding [the PFMs]. For example, ask yourself if, and to what extent, they will sell personal information.

Is it important for students to start building credit, if they haven’t already? How can they safely establish credit?

Honestly, I’m not a fan of students building credit for the sake of building credit. Sure, they’ll need to use credit at one point or another, but I find students hyper focused on creditworthiness as if it were a measure of self-esteem. I think that’s one of the reasons I’m not saying you must have a credit card through [a specific age]. I do not subscribe to those kinds of rules or principles.

“I’m honestly not a fan of students building credit for the sake of building credit.”

Research shows that when you use credit, you spend more. One of the reasons is that you don’t feel the pain of loss when you pay on credit. For example, if you went to Best Buy or the Apple Store to buy a new iPhone and counted $ 1,300 in $ 20 bills, it might hurt, especially compared to just swiping your credit card. credit.

I hear students, even in my personal finance course, talk about rewards cards, but these rewards cards are meant to entice us to spend more, so that any benefits associated with those miles or cash back. money is set aside the minute you pay interest. I think we can quickly surpass ourselves, especially when there is no pain of loss associated with shopping.

What are the best practices when buying on credit?

Treat the use of credit like cash. Do not charge more than what you can afford to pay when the invoice arrives.

Know the type of card, card terms and credit agreement you are entering into, and assess whether your bill is paid in full each month.

What’s most important to understand when we talk about credit is that your payment history is the most important factor in your credit score, along with the amount owed versus the credit limit. Those two there [factors] make up almost 60% of your credit score. And remember, you are building your credit every month.

What types of products or accounts suitable for students do banks offer? Are there any offers that seem student friendly but aren’t?

So, as I often say, it depends, and I think the answer is probably “yes” to both [questions]. Many banks have student accounts. Many will not have associated fees as long as you are a student. When it comes to things that sound too good to be true, I’m absolutely sure they exist too. I can’t name any, and luckily the Consumer Financial Protection Bureau is a watchdog in this regard.

While this isn’t a popular idea, it’s really important to read the fine print to understand what kind of deal you’re making. We don’t think of credit cards as loans, but basically you borrow money every time. And interest is payable once you have a balance. Most cardholders don’t pay their balance in full each month.

“We don’t think of credit cards as loans, but basically you borrow money every time.”

What should students know about filing and paying taxes?

I think the most important thing is to understand whether or not they are required to report taxes and keep good records. Student employees can visit University experiential learning for more information on tax returns, and offers from the Johns Hopkins Office of University Finance help with tax preparation for international students.

Any other tip you would like to share?

In the spring I will be teaching Personal Finance Management, a graduate course that covers the full spectrum of personal finance, students’ relationship with money, and understanding their values ​​around money to taxes. , retirement and estate planning.

i want to recommend PowerPay.org. The Utah State University Extension has created this free tool that tackles debt repayment using the snowball method. Let’s say you have five bills, each for $ 100 per month. [The snowball method] would suggest that you attack the one with the highest interest rate first. When you’re done paying the first bill, you take that $ 100 and apply it to the next bill, so now you pay $ 200 on the second bill and then $ 100 on the rest. The tool offers an amortization schedule, so you can see when you’re paying things off and put them in context.

Finally, start saving today. Students can create an emergency fund to have a little cushion to avoid a financial crisis. And, if students have income they don’t need to support themselves, they can start an IRA now.