The Student Financial Services Office is committed to helping students. "Once students are in college, financial literacy plays a significant role in their social and academic success. Financial literacy is a life skill, a requisite to citizenship, a critical intellectual competency, and an essential component of a student's success in college." (Kezar & Yang, 2010).
By preparing students with the necessary life skills to effectively manage their finances while in college, we not only add value to their education experience but we accomplish the university mission (paraphrased)
to a commitment to student success within a diverse, supportive campus culture.
A budget is a list all revenue (income) and expenses and ensure your revenue exceeds your expenses. Everyone should create a monthly budget and college students may find it more helpful (beneficial) to create a semester budget.
By listing all of your expenses, you may discover you're spending a lot more than you thought you were. For example, $4.00 for a Starbucks coffee each day may not seem like a lot, but when you look at the expense for a month, it's over $100! You will discover ways you can save money when you create a budget.
First, write down your income from all sources. Then write down all your fixed expenses these are bills that stay the same each month. Then include any variable expenses--these are the ones that fluctuate and you have some control over the amount.
The difference (hopefully positive) is the money you can use for whatever you want--to spend, save, invest, whatever--wise use of this money will impact your future.
There are many budgeting tools that you can use to create a budget.
Fixed expenses are fixed or the same each month--like rent or a car payment.
Variable expenses fluctuate each month--like a utility bill or groceries. These expenses you do have some control over; you could keep the thermostat higher to reduce the air conditioning, for example, or buy generic or store brand products to reduce your grocery bill.
If your expenses are greater than your income, that means you are spending more money than you receive and you need to take a good look at both your income and expenses. Some questions to ask yourself:
- Can I get a part-time job to increase my income?
- Can I reduce my expenses by cutting back? Am I spending money I don't need to on eating out or buying clothes? David Ramsey has a saying, "Frugal today, Wealthy tomorrow"; you should keep that in mind
There are many tools you can use. Here are just a few:
The first thing you should do is apply early. Students can complete the FAFSA starting in October. When the Financial Aid Office begins to award institutional (UNF) grants and scholarships, they award to those who have completed their FAFSA. If you haven't completed your FAFSA early, you may lose out on receiving institutional grants and scholarships, which you do not have to repay.
Secondly, go to the Financial Aid page on our website and review the Internet section to search for scholarships-apply for as many as you can.
Please check your awards via myWings. Go to the student tab and then click Financial Aid Awards. Read the information carefully as it will indicate the amount you receive for both fall and spring as most aid is divided in half and students receive half of the total award each term.
Be aware that most awards are contingent on your registration and you need to be a full-time student (12 or more hours) to be eligible. Some require students to be registered for 15 hours. If you take less than the required hours, you may not receive the award at all or you may receive a prorated amount based on your registration.
You should not borrow more than you really need. You do not need to accept the maximum offered and should not unless you truly need it to live on. Loans are considered financial aid, but you do have to repay them (with interest) when you graduate or leave the University.
Remember one of Dave Ramsey's Tips to wealth is "Frugal Today, Wealthy Tomorrow". Do you really want to graduate with $30,000 or more in student loan debt so you could eat pizza and drink beer every weekend or have new clothes? Borrow as little as you absolutely need!
There are serious consequences for not repaying your student loans. It will be on your credit report, which will decrease your credit score and increase your interest rates if buying a car, house, etc. You may even by denied credit. You may have trouble finding employment as many employers do a background check that also includes your credit report. And student loans are not dischargeable in bankruptcy so you have to repay them no matter what.
Good vs. Bad Credit
Though paying with cash has many benefits, it does not help establish credit--good or bad. When you are applying for a car loan, for example, the dealer wants to see that you have a good history of paying your bills on time. You can't establish that if you pay with cash. Check out this powerpoint for information on Credit
You may want to start with a small credit card limit; purchase a few items each month and pay the bill on time and in full. You can even buy and use a prepaid credit card. The main focus is to pay your bills on time and in full. Paying on time shows your ability to pay your bills; paying in full will eliminate paying any interest charges (thus saving you money).
Caution! It's very easy to overspend with a credit card so be careful and keep track of what you are purchasing with a credit card. Using a credit card for the convenience and only paying one bill a month is a good use of a credit card, but be conscience of overspending.
This establishes "bad" credit and has many negative implications. Not paying your credit card bill on time will cause a late fee and interest charges to be added to your account. In addition, this will negatively impact your credit score as it indicates you are not credit-worthy (not able to pay your bills).
You may be charged a higher interest for insurance and any new loans you take out as well.
A FICO credit score is a credit score developed by FICO, a company that specializes in what's known as "predictive analytics," which means they take information and analyze it to predict what's likely to happen.
Your credit score is based on a number of factors and is used by companies to determine your ability to repay or pay for services. A high score (over 750) means you are very likely to repay the loan and so companies will give you a better/lower interest rate. A lower score means you are less likely to repay and so you will be assessed a higher interest rate for borrowing.
The credit bureaus look at the following information to determine your score:
- Payment history (paying bills on time)--this has the greatest impact on your score
- Credit utilization rate (how much of the available credit you have are you using?)--many lenders want to see this ratio less than 30% (ideally this should be as low as 10%)
- Number of accounts--how many credit accounts do you have with a balance? If you have more with a balance than those with a zero balance (you pay in full each month) can negatively impact your score
- History of credit use--how long you've used credit (as past behavior can predict future behavior) is another factor; a longer credit history is better than a short one
- Credit mix--the variety or types of credit (credit cards and installment loans). Is all your credit the same--from retail stores for example?
- Hard inquiries--whenever you request credit, the lenders asks to look at your credit. Too many requests indicates a higher/greater credit risk as you may be taking on additional debt
- Negative information--this includes items such as bankruptcy, collections, tax liens, judgments. The type and severity will determine if, and how much, this affects your score
Your credit report lists all your credit information reported by any and all companies. This information is used to determine your credit score (FICO) so it's important to review this annually to ensure there are no errors. By law you can request it annually for free.
Review it to verify the information is correct and dispute any errors you find. Close any accounts you no longer use. Getting rid of erroneous and unused credit or loans will generally improve your credit score (to determine your FICO score, the number of lines of credit you have is an important factor).
Reviewing your credit report may also alert you to identify theft--someone using your identify to borrow money.
Most people do not need more than 2. You may want two different cards (VISA, MC, AmEx, Discover) in the event a business does not accept one.
Be very careful with spending; it's very easy to overspend with a credit card unless you are keeping track each time you use it.
Keep your credit line reasonable so you can pay it in full each month and keep your spending to no more than 20% of your limit.
You need to pay at least the minimum amount due to avoid a late fee, but you will be assessed interest on the balance. Having a large balance on your credit card will negatively impact your credit score.
Here is an example of what you would be paying in interest and how long it would take to pay off your credit card if your balance is $2000 and you don't charge anything more:
|Credit Card Balance
||Interest Rate (%) Charged
||Months to Pay Off Balance
||Years to Pay Off Balance
||Total Cost (Balance + Interest)
Emergency Fund and Retirement
Everyone should have an emergency fund for emergencies or unplanned expenses. You should have 3-6 months of expenses in your emergency fund.
What if you lost your job--could you pay your bills? What if your car broke down--could you pay for it and your bills?
Have you heard the phrase, "Pay Yourself First?" Put money aside each week or pay period in the event of an emergency so you would be able to pay your bills and maintain a good credit score.
It's never too early to start; in fact the earlier the better. Due to the "magic" of compound interest, the sooner you begin investing in some type of retirement--whether a Roth IRA or 401K, the money will accrue interest on interest and multiply your investment. Start saving, even a little, now. And you can claim the amount you pay to an IRA on your tax return (there are certain limitations-please consult a tax professional).