Manage Your Money

The following is an excerpt, reprinted with permission, from 10 Things Employers Want You to Learn in College, Revised: The Skills You Need to Succeed by Bill Coplin, copyright © 2012. Published by Ten Speed Press, an imprint of the Crown Publishing Group. This piece gives some good advice to college students about handling money -- an important topic you don't often see in a college/career book.

“Money makes the world go ’round.” —John Kander and Fred Ebb, songwriters and lyricists for the musical Cabaret

If you are careful about your own cash flow, you will be generous to your future. If you are in constant debt, working extra so you don’t fall behind, you will have a very unpleasant future.

Managing money to reach your goals requires careful attention to detail, not only in reading the fine print on a credit card application but also in balancing your checkbook and paying your taxes. Managing money is not just a matter of keeping your expenses in line with your income but also deciding how you will invest your money in the future. Every time you buy something for immediate gratification, you reduce your income to be invested in the future. Money management means thinking through the trade-off and then having the discipline to implement the necessary decisions. Such a trade-off might mean resisting the urge to cash in by selling a textbook for a course you just completed, knowing that you might need it a year later for another course in your major.

Knowing how to manage money well is key to getting and keeping good jobs. First, money problems while in college can hurt both your GPA and your Skills Score. Taking that extra part-time job or worrying about bills reduces the time you have for studying and maintaining your health. It could mean giving up a great nonpaying internship experience. Although many students say they have to work more than twenty hours a week to make ends meet, my experience suggests that at least half of them are working for “wants” and not “needs.” I find it very strange when students tell me they don’t have enough money to buy books in January, and then in April, they tell me about the great time they had in the Bahamas over the spring break.

More and more students need extra money to pay for tuition, living expenses, and books—not just to have fun. If that’s you, careful spending and time-management skills are crucial. For example, you may be able to avoid book expenses by taking the time to go to the library to use books on course reserve, or to order them used. You may need to avoid costly activities that serve as entertainment, and you may need to take on more debt than you would like. However, careful money management while you are in college can lead to huge payoffs years down the road.

Second, when you graduate, you may be forced to take jobs that you would not otherwise take because you have significant personal debts to pay off. You may be so consumed by the fear of not paying your bills that you take the first job that comes along. Roughly speaking, for every $10,000 you have in student debt, you will pay $100 a month for ten years. If the debt is $50,000, the payment will be $500 a month, which usually is a significant portion of your rent. You may even find yourself living with your parents because of this debt.

Finally, no matter what job you take as you move up the ladder, you will have increased responsibilities for expenditures in your department or division. You will face projected and actual budgets, and you will learn to make forecasts and monitor expenditures. If you learn good money-management techniques for yourself, you will be prepared for the budget exercises you will face on your road to being the CEO of IBM, the executive director of the Boys and Girls Clubs of America, or the secretary of education. You should also be aware that many employers do a credit check on their new hires, so your money-management skills are very important.

COURSES: Courses in management and consumer studies that introduce you to tax policy and personal financial management are available at most colleges and universities. They can be extremely helpful in preparing you for the work world. You should take at least one of these courses at the introductory level. A really useful course, if offered, is one that deals with starting a business or entrepreneurship. Even if you don’t plan on having a business career, you can benefit from a course in which you come up with an idea and develop a plan to finance it and keep it going. Taking a personal finance course is also a very good idea.

NON-COURSE ACTIVITY: Develop a yearly budget of income and planned expenditures that you update regularly. There is a form in the appendix that will help you develop a semiannual budget. Completing this form will help you improve your money management skills. If you have an opportunity to become treasurer for a student organization, take it. Finding yourself in a position to tell your frat brothers not to buy another keg of beer because you will go into the red is a great learning experience.

Avoid running up debt on your credit cards. If you do have debt, figure out exactly how much interest you will be paying. If you are lucky enough to have parents who pay your credit card bills, your insurance bills, and everything else, ask them to work out a budget with you. Then, twice a year, have them deposit in your account the amount from which you will pay your bills. This is what the parents of one of my students did. The student writes:

“During my first two years, my parents paid all of my school bills, like tuition, housing, all the fees, etc. If I wanted any spending money though, it was up to me. It didn’t take long for me to realize that I’d have to get a job on campus if I wanted any money to be left in my bank account by the time the semester ended.

“When I moved off campus junior year, our deal changed. They still paid my tuition, fees, and rent, but I had to pay for all of my own utilities. I also had to pay for my own phone, cable, Internet, and any other household needs. I wasn’t given money on a regular basis either. At the beginning of the semester, my parents gave me a check that covered that semester’s rent and the amount of money they would have spent on a meal plan. I was responsible for writing the checks every month. I was free to spend it however I want, but if I chose to spend my rent money on a stereo, I had to come up with the rent myself. In this way, they taught me to get used to making careful financial decisions, but still kept a safety net under me as I moved into the ‘real world.’”

If you have someone bankrolling part or all of your college costs, ask for a deal like the one described above. It will be a great training device in money management. If you’re paying your own way and keeping your debt as low as possible, then you’re already getting that training. It may not seem like it now, but one day you will count it as one of the most beneficial experiences of your college career. The payoff will begin with a resume that says, “Financed 100 percent of my college education,” and it will carry through to everything you do.

Comments

[Terry]

Financed 100 percent of his college education with money from parents and financial aid?

[Shawn James]

Money management was so important as study in my college life. Actually, my parent gave most importance to money management and same thing they teach me. My college life was full of enjoyment because I never apply for debt. My great money management skill helped me to get success in professional career as well. I am a successful trader.