“Personal Finance 101 for College Students - Walletpop.com” plus 1 more

Personal Finance 101 for College Students - Walletpop.com

Posted: 24 Jan 2011 03:58 AM PST

If you're like most college students, you think a lot about finances, but aren't too adept at managing them. With the help of Joseph Groebl, wealth advisor for V Wealth Management LLC, here's a list of the top 10 things that will help you develop money smart practices and habits. In the following weeks, I will delve deeper into some of these topics.

1. Set a Budget

This is the most basic step. Your goal is to balance how much comes into your account (income, loans, etc.) with how much goes out. Add up your monthly expenses (groceries, transportation, rent, bills) then allocate a little bit of spending money. "You don't make mistakes when you budget," said Groebl. Try this budget worksheet to get started.

2. Track Spending

Do this for a few weeks and see how you are really using your money. Prepare to be surprised. Resources like www.mint.com will do this for you – pie charts and all. When you realize 60% of your monthly spending is on dining out, it might be time to go to the grocery store.

3. Live Within Your Means

You are in college. Act like it. "Don't go to the store, avoid it like the plague!" said Groebl. "Focus on saving – we are in hard times." Just because you are away from your parents doesn't mean you should buy all the things they wouldn't. Practice self control, shop for your basic needs, shop sales, and remember it will never hurt to have a little extra money in the end.

4. List Goals

A Harvard study found that 3% of their MBAs made 10 times as much as the other 97% combined. What were they doing differently? Writing down their goals. Experts in goal setting advise making them SMART, that is specific, measurable, attainable, realistic and timely. Being rich some day is not a SMART goal. Saving the amount needed to fund a summer abroad program by next summer is. Whether your goal is saving towards a big purchase or paying down debt, Groebl suggests posting it in a place that you will look at every day.

5. Reduce Debt

Before you are in a position to start building wealth, you must first get your debt to zero. Don't take out loans beyond educational and living expenses. Don't carry a high balance on your credit card. "Reduce to the ridiculous," said Groebl. "Keep things simple for goodness sake."

6. Respect Credit Cards

"It is easy to bash credit cards," said Groebl. "They are great--but they have to be respected." Read the terms and understand your rates. You have to play by their rules. You must have the discipline to maintain a zero balance, so never make huge purchases with the mindset you will pay it off over 6 months.

7. Never Be Late on a Payment

Whether it is loan payback or credit card balances, always pay on time or else you will quickly annihilate your credit score and be hit with high, resource draining late fees. If you do not have the money, call the company before your payment is considered late. "They will make arrangements with you" said Groebl.

8. Start an Emergency Fund

It is smart to have three months of living expenses put away for that unexpected big expense. If you have trouble saving money, set up a portion of your paycheck to be directly deposited into a savings account. Even though interest rates are low these days, keeping your money in an interest bearing savings account or short-term CD keeps your money working for you. Make this account accessible enough that you can access it when necessary, but not so much that you can tap into it when you want a new TV.

9. Practice Smart Saving

There are tons of resources with advice on how to pinch pennies here and there. Here's a link to 118 of them from CollegeScholarships.org. Once you have mastered these techniques, reward yourself every now and then.

10. Seek Scholarships, Not Loans

With the high price of tuition, loans are often an inevitable reality of college life. Make sure you understand the terms of the loans and pay them off in a timely manner. However, even better than loans are scholarships--which are available from countless sources, and sometimes for odd reasons. Do some research and apply for as many as you qualify for.

Sarah Smith is a junior at Loyola University Chicago majoring in international studies and visual communication. She is writes for Money College about her personal finance experiences as a student.

This entry passed through the Full-Text RSS service — if this is your content and you're reading it on someone else's site, please read our FAQ page at fivefilters.org/content-only/faq.php
Five Filters featured article: Collateral Damage - WikiLeaks In The Crosshairs.

Personal Finance: Lessons from the downturn - Philadelphia Daily News

Posted: 22 Jan 2011 03:56 PM PST

Posted on Sun, Jan. 23, 2011

People are feeling better about their 401(k), IRA, and college-fund balances after a 95 percent upswing in the stock market healed some of the hurt from 2008 and early 2009.

So now, perhaps, you dare look back at a few lessons that can save you from some of the pain of the last few years.

No one can tell you what will happen. Economists knew that there were problems in the economy before the market started plunging in 2007, evaporating 57 percent of the money invested at the time. But few realized that the financial system would crumble and cause the worst stock market plunge since the Great Depression. Just as the depth of the plunge was not anticipated early in the decline, the upturn that started in March 2009 sneaked up on investors, too. Even the pros, fund managers who pick stocks for a living, thought it was a head fake early on. Some of the most talented fund managers confessed months later at a Morningstar Inc. conference that they wished they had bought more during the dreary days. They discovered in retrospect they had missed an opportunity to buy stocks at the lowest prices of their lifetime. After the market climbed for months, professionals regained their nerve, but many individuals did not. Missing a 95 percent upturn means you do not heal from the damage you endured.

Understanding trends

What goes up must come down, but what goes down does come up. Studies in "behavioral finance" show that people are poor at understanding trends of all kinds, not just when investing. If we see something on an upswing, we figure it will continue, and if we see something on a horrible or scary trend, we figure that is for keeps, too. That gets people in awful trouble with investments. In 2000, people poured money into technology stocks because they had climbed almost 100 percent the previous year; then they plunged 80 percent. In 2005, people figured they could not go wrong buying homes and flipping them. You know the rest of that story.

Bear markets, or serious downturns of 20 percent or more in the stock market, happen on average every three years. Yet, somehow, when people have enjoyed a rising stock market for a long time, they figure that is normal, and the money they have made is theirs to keep. When the market falls, however, fear takes over, and people believe that something is permanently wrong.

Neither the euphoric nor dreary assumption is true. And if you ever imagine the full stock market going to zero, ask yourself: Do you think people will be going to jobs, sitting down to dinner, carrying out the garbage and buying winter gloves when it's cold? If so, it means you assume commerce will go on, and if commerce is going on, business will still exist, and stock prices, in general, will not go to zero.

A tip-off

High prices are your tip-off that trouble might be coming. Professional investors choose investments that are good deals - in other words, cheap. So when they see an investment at a ridiculously high price, like homes in 2005, they stay clear and buy something cheaper. When you buy something cheaper, there is a greater chance it will climb a lot and you will make money. For example, when people started putting money into gold during the financial crisis, people had not been interested in it for two previous decades, and it rose considerably from below $800 an ounce. Yet many ignored gold until it was selling at more than $1,200 an ounce. At that point, a herd mentality took over, and people followed the other guy. But when the herds take over, there is often less chance of making money.

You have heard the solution many a time: Buy low and sell high. A simple approach is to be aware of what professionals say. When everyone from the taxi driver to the delivery guy is talking about an investment, the period for making a lot of money is probably drawing to an end.

Gail MarksJarvis is a personal finance columnist for the Chicago Tribune. E-mail her at gmarksjarvis@tribune.com.

Personal Finance

Monday, January 24, 2011