Money Management Tips for the College Student and Their Parents

The cost of college can be eye-watering for many, if not all, students and parents alike; and it’s not just tuition fees that have to be paid, but all the living and additional costs ranging from rent to textbook purchases. With many families feeling the pinch of the economic downturn more than ever at the moment too, this makes going about college in a frugal way more important than ever. But it’s not just the student that can find ways to cut the cost of college, as it’s also the parents who will undoubtedly be funding some part (or all) of their son or daughters time at university too. Hopefully the tips below will, therefore, provide both students and parents with a few ways to make college expenses slightly more manageable.

Learning Resources:

Textbooks can cost over $100 dollars each. And if you buy all the textbooks you need, brand new, over the course of a four year degree you will spend a staggering amount. Buying second hand books is the obvious – and a very good – idea, but also consider buying older editions of the same textbook. Very often, from one edition to the next, the changes will be minimal and let’s face it, how much does a subject like math or statistics change? Also make the most of your university’s subscriptions to online journals. You’ll be able to access journals for free, and they contain more recent research findings than text books. Sharing textbooks with a class mate is also a way to half their cost which, again, can’t be a bad thing. As far as laptops and computers go, remember that a budget $400 dollar one will access facebook, allow you to type up essays, and send emails just like a MacBook can.

Discipline Yourself with Drinking and Going Out:

You want to have fun when you go to college, and don’t let money get in the way of that unless you’re in a position where you have to. But keep a cap on how much you end up blowing on beers and nights out with your friends. Think about setting a budget for this part of spending each week and sticking to it. Also, when you go out don’t take more cash than you can afford to spend and leave your debit/credit cards at home so you don’t get tempted into spending money you don’t have.

There are Times When it doesn’t Pay to Cut Costs:

Money Tips for CollegeAlthough cutting unnecessary costs and avoiding overspending should be encouraged amongst all college students, there are occasions where you need to take a more balanced view and sometimes pay that little bit extra. For example, it’s a good idea to replace takeaways with easy-to-cook homemade meals, and it’s also sometimes a good idea to replace fresh vegetables with frozen ones that are cheaper and will store for longer. But with your diet especially, you do need to consider keeping a bit of a balance. For example, whilst it might be possible to feed yourself on $10 a week, you’ll probably also end up jeopardising your health as you cut out certain food groups that are essential for a healthy lifestyle.

Another example of where it pays to spend that little bit extra is with heating bills. Students in shared houses are renowned for living in the cold to save their dollar bills, but a cold/damp house can lead to a number of health problems. For example, dampness can lead to an increase in allergens and dust mites that can exacerbate and induce asthma. A cold and damp house will also do no good for your immune system, increasing your propensity to get a cold or the flu as well.

And Some Tips for Parents:

As mentioned, most parents will take on board some or all of the financial responsibility for their son or daughters college expenses. And for that reason, you too can also have a big influence over how much money gets spent across the course of their undergraduate years. Therefore rather than giving them a lump sum of cash at the start of each semester for example, think about a weekly direct debit instead. That way, they won’t be able to spend all of their allowance at once and they’ll find it easier to budget for all the costs they encounter.

Another important thing for parents to do is to foster a relationship of mutual respect and understanding when it comes to managing college expenses. As a parent, you need to encourage your son or daughter to be open about any of the financial difficulties they might be having. That way, they won’t end up trying to sort out a problem – like a late credit card payment – themselves, which might only escalate into a bigger and bigger problem later down the line. Showing that you understand the fact that there will be other things they want to spend their money on aside from textbooks and fresh groceries will also go a long way in fostering this all important two-way line of communication.

img credit:NazarethCollege on Flickr.

The Higher Education Path Not Taken

I’m not sure about you, but I have a hard time with keeping myself from constantly over-analyzing everything.  You name it, and I’ve analyzed it.  Even things that I cannot change, like my choice in Colleges.  Should I have gone to a different college?  Perhaps.

If I look at it from a strictly financial perspective, the answer is a definitive yes.  I went to Jamestown College, which is a private school.  While it isn’t the most expensive private school you can choose, it’s not nearly as affordable as a state school would have been.  Instead of the student loan debt that I am paying on now, I would have only about half of it had I gone to a state school.  Maybe less.

If I had gone to a school closer to home, I could have saved money over the summers by moving back in with my parents.  Traveling home would have been a far cheaper endeavor, and certainly would have been a shorter endeavor.  It’s over 950 miles from Jamestown to Hamilton, MT, where my parents live.  Even with the best car I had, mileage wise, it cost at least $200 to drive home and back.  And that’s without stopping along the way at a hotel.   And don’t even get me started on the money I could have saved on laundry by bringing it home and using the washer and dryer at home!

Of course, not every decision in life can be judged solely by it’s financial merits.  (Not that I was all that adept at anything financial back then anyways.)  Something as important as college has many factors that go into it’s choosing.  For me, the money did come into play simply because my family didn’t have much of it, and I needed to be able to get enough financial assistance to go to the college I chose.  I also wanted to play football, so the college had to have a team.  I’m not a big fan of lots and lots of people, so the school needed to be smaller.

Having had pretty good grades in high school, I was able to get scholarships and financial assistance to go to all of the schools that I applied to.  I had ruled out the main state schools as being too big.  They also got ruled out because I wouldn’t be able to play football.  In the end, the choice came down to a smaller state school, a private school closer to home, and Jamestown College.  All offered everything that I was looking for.  All were good schools.  What it finally came down to was friendliness.  Of the three schools I had narrowed it down to, only JC took the time have a enrollment counselor call me.  The football coach at JC was the only one to call me and personally invite me.

Sorry, I’ve gotten off on a tangent, and it’s turned into a bit of a love fest.  But, there’s a reason for that too.  It’s the funny thing about college.  No matter where a person goes to college, the college they went to was the awesomest college ever!  It’s not about the money.  It’s not about the education.  It’s not about the faculty, or even the sports teams.  Those all play a part in the choosing of the school, but, really, play very little part, if any, in how you feel about the school.  No, the college you attend is the best school because of the people you meet, the adventures you have, and the growing up (hopefully) that you do while you’re there.

When I think back on my higher education, I can say that I got a good education, but I can also say that I could have just as easily gone anywhere and gotten a good education.  I was able to play a couple of years of football, and that was cool.  I could have played at several other schools too.  I certainly could have gone to a cheaper school and had less student loan debt when I was done.  But, what really made college, college was the people I met.  Either directly, or indirectly, through college, I met my wife, and made so many friends.  We had so many shenanigans!  And that is what made college worth every penny.

Let’s do something fun.  Tell us all what college you attended in the comments below.  Maybe we’ll find some fellow alumni!  (Also, I’m curious how many of you are Ivy League-ers. :) )
img credit:pwbaker, on Flickr

Worst Money Mistakes – Penny Stocks and Out of State College

what is your worst money mistake?

For those of you that haven’t come across my blog – which I’m assuming is most of you – I should start by saying that my financial struggles and moronic financial mistakes is what led me to become a Dave Ramsey-trained Counselor and an Investment Advisor.

So, as I discuss my biggest money mistake(s), I will preface with: I realize that these are extremely dumb decisions. However, I made them, I learned from them, and ultimately they helped me grow into the person I am today.

Who Wants to Trade Penny Stocks?

Despite knowing the topic we were writing about today, I couldn’t only limit my response to ONE financial mistake because I have two that are pretty brutal.

The first involves trading penny stocks and losing $30,000!

Ever since I was in high school I remember LOVING the concept of the stock market and investing money. I don’t know what it was but it just fascinated me.

So, a few years ago I worked with some friends and one of our usual conversations revolved around investments. It was right around the time that Apple started to boom and my co-workers would always bounce ideas off of me and prod me for my input.

Well, one of these co-workers ended up telling me about this “hot” penny stock. You know…he heard about from a friend whose sister’s brother’s nephew worked for the company.

Anyway, he was told about this great new technology that was going to change the oil industry, and apparently this company had a patent on the technology that was going to make it happen! Cha-ching!

As with all penny stocks, this one was a sure thing!

After many hours of research and digging into the company and their product, I went ahead and invested all of my IRA into the stock. Please know that I would not recommend this for any of you.

Considering that I was young (and dumb), I figured I could afford to lose the small retirement savings that I had earned in my first year of employment after school. It was indeed a whopping $3,000 that I was putting at risk; what’s the big deal, right?

Well, after much speculation (which most penny stocks are surrounded by) the stock, and my portfolio, continued to go UP and UP over the course of a few weeks.

Instead of being a prudent investor (which investing in penny stocks throws that notion out the window) and selling off some of my shares to lock in the gains, I got greedy and thought that the stock would continue to rise.

I mean seriously, the rise was all based on speculation and the company hadn’t even landed a big contract yet. ‘Just think how much the stock could be worth when it lands with one of the big oil companies!’

Despite my IRA being worth $30,000 (yes, up from the $3,000 that I started with) I decided to stay put.

It’s needless to say considering this is a post about one of the worst financial mistakes I’ve made but I’ll say it: the value of the stock plumeted the two weeks that followed as the speculation dwindled and my “hot” penny stock turned ice cold.

I know…I know…I was pretty (extremely) dumb and got greedy. I gambled and I lost.

I wanted the get-rich-quick scheme and ignored all sound investing advice.

Attending an Out-of-State College

My wife and I were actually talking about this a few weeks ago, but I have come to learn to view my past differently than some.

While I could beat myself up over all of the ignorant decisions I’ve made over my life, I’ve realized that I wouldn’t be the person I am today without them. I wouldn’t be married to my wonderful wife, I wouldn’t work a job that I love, and overall I just wouldn’t be who I am today.

So, even though this post is about past mistakes I’ve made, I encourage everybody reading out there to embrace your failures, learn from them, and ultimately be thankful for them.

Life has a weird way of teaching us things and the reality of our world is that most of us learn from mistakes; we as stubborn people love to learn things the hard way!

Despite saying that, I acknowledge that my second biggest financial mistake was going to an out-of-state school and going into debt for all of it.

I know that my decisions were made in pure ignorance as I was never really taught anything about managing money growing up as a kid.

Nobody ever stopped to tell me that I was making a huge mistake by going $20,000/year into debt each year for college, and instead explained to me that I could choose to attend an in-state school and only pay half or a quarter of that!

Who am I kidding though?

Knowing me back then I’m not sure it would have mattered. I didn’t understand wise financial principles. I was ready to leave and have fun. I was ready to finance my lifestyle by taking on as many student loans that the lenders would give me!

…and I’m still paying for it today (literally).

Applied Knowledge is Power

Speaking from experience both personally and from what I’ve gained in coaching hundreds of invididuals over the past few years, writing this post about my moronic financial decisions will prove meaningless at the end of the day unless those that reading this will learn from the mistakes of others and not make the same mistakes themselves.

If you have children, I’d encourage you to teach them sound financial principles at a young age (or as soon as you can). Teach them about debt, living on less than they make, the principles of budgeting, investing and how to retire comfortably, and making smart decisions when they’re getting prepared for college.

Where most of us fall short in our personal development is that we don’t apply what we learn. Sure, we learn (as evidence that you’re reading this article) but what you do with the information is ultimately what will set you a part.