Managing to keep a balance in a bank account is hard for most students. But managing to do that and pay bills post-graduation is even more difficult.
On Monday, March 19, Vice President of Retail Administration Martha Curtis of the Savings Bank of Walpole spoke at a small discussion hosted by Academic and Career Advising and the Counseling Center about balancing income and expenditures and how recent graduates can manage their money wisely.
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“As far as affording life after college, I wish I could sum it up in five words,” she said. “Unfortunately, that’s not going to happen.”
Curtis stressed the importance of breaking down one’s monthly budget and looking at the total amount of money spent versus the total income received. She said, especially for recent college graduates with tight budgets, it’s important to break down all expenditures and figure out what are wants and what are needs.
“Budgeting is really simple math,” Curtis said. “Itemize out every single thing that you do that you pay for on a regular basis.”
By creating a list of all finances, from groceries to cell phones bills to rent, Curtis said students can examine where exactly their money goes, making it easier to cut when necessary.
For example, she said that by purchasing a $2 cup of coffee at Dunkin’ Donuts every day, that expense can add up to more than $500 a year. Although to most a cup of coffee doesn’t seem expensive, it can make a big difference over time.
Curtis said that by replacing a cup of coffee from Dunkin’ Donuts with coffee made from home, you can save hundreds of dollars. She said that after you break down your budget, you can often find ways to substitute or cut the extras to create sustainable monthly spending habits.
“It adds up,” she said. “These are little things that take money right out of your wallet.”
For college graduates, Curtis encourages students to remain under their total income in order to begin to pay off student loans quickly.
“Put every available dime you have toward those student loans to get that monkey off your back,” she said, suggesting that living at home for a year to pay down student loan debt is a great idea if possible.
After looking at the income verses expenditures, Curtis said people fall into one of three categories.
The first category is that you have more income than expenses, which is the best position to be in. When there’s extra money leftover, you can being to pay off college or credit card debt, but can also start saving for later too. She stressed the importance of putting away money for retirement as early as possible rather than waiting until later, so that you can begin to build interest on the money you save.
The second category breaks into two portions, but is made up of those whose income equals their expenses. If you’re making just enough to cover what you spend, Curtis says you’re doing alright, although you don’t have the opportunity to begin to put money away. But if you’re breaking even because you’re using credit cards to put off payments, Curtis said you might have a problem. She said that using credit cards to put off payment is only setting yourself up for a larger problem and you need to begin cutting your budget.
The last category is those who make less than their monthly expenditures, which is problematic because they are operating on a negative budget. At this point, Curtis said it is critical to carefully weigh what is absolutely necessary, like food and shelter, and what are extras, like cable.
Kelly Graham, the associate director of Academic and Career Advising, said she’s heard of people getting rid of their cable and using the Internet, like Hulu, for television shows. She said this can significantly cut down monthly costs.
“Raising income is really hard. Your best bet is to look at your expenses, and look really hard at your expenses,” she said. “It isn’t pretty. It isn’t easy when you have to look at people’s expenses [to cut].”
Curtis also discussed the importance of knowing how your credit score works, and how opening and closing credit accounts can affect that. She said as per the federal government, anyone can get one free credit report per year from each of the major reporting bureaus, Equifax, Experian, and TransUnion. She said you can simply go online to do so.
“Credit has a huge impact on you as you move forward,” Curtis said, encouraging everyone to find out what their credit report says.
She said your credit report is made up of three major components; whether you pay your bills on time, how you handle the credit you have in terms of time to debt, and how long you’ve had credit cards and how many you have. She advised the group to open multiple lines of credit, not to max out cards, and to pay all bills on time in order to help build credit scores.
But ultimately, she explained that avoiding credit cards altogether doesn’t help your score, as many think, but in fact hurts it.
“Have no credit, it’s hard to borrow money,” she said, like taking out a loan for a car. “We want to know that you will pay back the money. You do want a credit card. Buy something, use it.”
Academic and Career Advising has held several talks in a series titled “Beyond KSC” to help reduce anxiety about graduation for seniors. These talks help students figure out what comes next after they graduate, and eases some of their concerns.
Joe Yazvac, a psychologist at the Counseling Center, said the center has seen increased anxiety about graduation from seniors, and that these events have helped.
“Most seniors don’t seem to have a lot of access to this information,” he said.
Sara Telfer, the assistant director of Alumni and Parent Relations, asked Curtis, who graduated in the Class of 1973, to speak when contacted by Graham because of her close ties to the community and expertise in the financial world.
“Martha has been involved in our office and has been very supportive,” Telfer said.
She said these gatherings are essential to assisting students before they graduate and have to deal with more significant real-world situations.
“They’re important on the student end because you get guidance and expertise from someone who’s done what you’re going through,” Telfer said.
Allie Bedell can be contacted at email@example.com.