Money Management 101
Starting college is full of new experiences – from academics to sharing a dorm room. For some students, one of the most unfamiliar and overwhelming experiences is learning how to successfully manage their own finances while in college. According to a recent national Chronicle.com survey, about one-quarter of dependent undergraduates have used credit cards to pay tuition. The same study also reveals that only half of high school seniors knew that card holders accrue finance charges if they only pay the minimum balance. From managing a bank account to paying on a credit card, students usually have a lot to learn to sharpen their financial know-how.
Since it has been some time since I first opened my bank account and learned the perils of credit cards, I decided to consult with our resident Tech financial “experts” regarding helpful, practical advice to share with today’s Georgia Tech families. The following information was contributed by Jim Pierce, director of Treasury Services; Jennifer Mullins, associate director of the Office of Scholarships and Financial Aid; and Carol Payne, Bursar of Georgia Tech.
Learn how to budget – While this skill may come easily to some, it is not innate and needs to be taught and practiced. Parents and students should work together to outline all the foreseeable expenses they will incur for the semester such as housing/rent, meals, books, tuition, fees, and other planned expenses. Parents and students should also visit the Cost of Attendance webpage on the Office of Scholarships and Financial Aid website.
Students should learn to plan for out of pocket expenses such as gas, convenience items, and other miscellaneous expenses. These can add up quickly and can cause even the best planned bank accounts to go into a deficit. Students who keep a log on how they spend their money are usually quite successful in budgeting for their expenses. For instance, if they realize that they are spending $100 a month on bottled water, they tend to make different choices in the future. While learning to budget may be daunting at first, it can also be very empowering.
Learn the basics about managing a bank account - Students who have never had to manage their own money especially need to learn the basics of how money is deposited and what happens when it is withdrawn whether via a check, debit card or automatic withdrawal. There are numerous national bank branches located within the Tech vicinity with convenient ATMs on campus (e.g. Student Center). If possible, students should consider opening an account over the summer with one of these national banks in their hometown so that the transition to banking while at Tech is as smooth as possible. During the summer months, it is also advised that students practice writing checks, using ATM cards, tracking their account balance between statements, as well as balancing their check book monthly against a bank statement. Don’t forget – talk to your student about what happens when they overdraw their account. Students don’t always understand the snowball effect that one bounced check can have on their account!
Be aware of common pitfalls:
- Credit Cards – while considered a necessary evil to some, using a credit wisely during college is a great way to establish credit. Students need to understand interest rates, minimum payments, and how charges and interest accrue. One rule to follow is to never put more on a credit card than what is in their bank account.
- Spring semester charges – these tend to sneak up on students after they return from winter break. Remember that no invoices are mailed to either the parent or the student. Instead an invoice is available online so that a student can see all the charges that have accumulated via registration, housing assignments, meal plans, et cetera. Charges are usually due during the first few weeks of January. Students can elect to have their parents pay their bills online via the Parent Payment Portal.
- Financial Aid – if a student receives financial aid for books or a computer it will be very important to monitor how this money is spent – it goes very quickly.
Have a plan to manage any refunds – Refunds can occur for a variety of reasons. For instance, financial aid may be awarded in excess of charges on a student’s account and will be refunded to the student. A student may drop a class or withdraw from school and, in some circumstances, be given a credit that will be refunded. All refunds are done through a direct deposit to the student’s designated checking/savings account. Parents and students should establish a set of rules to manage any funds returned to the student. This will ensure that the money is allocated appropriately into the predefined accounts.
Consider a part-time job – as important as it is for students to learn how to manage their expenses, it is just as important for many students to understand how to earn extra money while in college. It has also been documented that students who work during college tend to perform better academically. While opportunities exist off campus for students to earn extra income, Georgia Tech also offers a variety of opportunities right here on campus. Visit the Center for Career Discovery and Development for information on part-time employment, co-ops and internships, and the Office of Scholarships and Financial Aid for information on Federal Work Study. Not only does working while in college help generate income, but it also looks fantastic on a resume.
Know how to address a financial issue and get back on track – this is very important and a sign of maturity. Let’s face it, we all have had times when we wish we had been more proactive in managing our finances. Talk to your student about the importance of understanding the financial situation they are in, how to stop the situation from getting worse, and how to proactively meet and discuss the issue with the department of concern. By addressing the situation head-on, your student is taking the first step in correcting the situation. Plus, it gives the student a sense of ownership and control over the situation.
- Workflow Status: Published
- Created By: Rachael Pocklington
- Created: 07/09/2013
- Modified By: Fletcher Moore
- Modified: 10/07/2016