How to Live Well All Year Long (as a college student)

When I first started budgeting, I realized I was spending an absurd amount of money at Starbucks and eating out.

Like many others, I work as much as possible during the summer and winter to stockpile money for the semester when I cannot work as much. My financial goals at the start of each academic year are always to:

  1. Make my money last until May.
  2. Experience that year with my friends and family.
  3. Save money going into the next academic year

In August, I would look at my bank account balance and be afraid to spend because although my bank account balance was high, I was unsure how long my money would last. I would say no to weekend trips or events with my friends, and I stressed about unexpected expenses.

It wasn’t about having money, I had some, but I constantly worried, Do I have enough?

Enter budgeting. With my budget, I decide how much I want to spend each month to live comfortably. I decide how much I need for gas, for eating out, for gifts, for trips, and all of the other things that might happen in my life that academic year. I also consider things that might happen, such as having to get new tires or replacing my phone. After deciding how much I need, I spread my pile of money out from August to May.

I don’t have enough money for everything that I list out that I want. Because of this, I must prioritize what is important to me and eliminate those things that are less important. For example, I do not buy coffee from Starbucks anymore, unless I am having coffee with a friend. I also follow the same rule for eating out. For me, I was spending too much of my money on grabbing coffee and food alone, that I had to say no when friends were going out. I also do not buy new clothes and limit myself when buying new possessions. I don’t have enough for possessions and experiences. If I buy a new shirt, I must say no to fun with my friends later that week. I try to choose people over things.

Depending on your goals, your budget may lead you to work less or work more. For me, my budget enables me to stress less about work because I know how much time I need to spend at work to fund my priorities.

For help getting started with your own budget, we have a Quick Start Guide to Your Financial Success on Budgeting available for you here:

https://www.wku.edu/cfs/quickstartbudgeting.pdf

As always, we also encourage you to take advantage of our free peer-to-peer financial counseling by setting up an appointment with one of our counselors. You can do that here:

https://www.wku.edu/cfs/become-a-client.php

Saving in a World of Targeted Ads

I originally wanted to write a blog post about subscription services, and how they eat up your income. On my laptop I started researching the most popular subscription services.

A few hours later I opened Instagram on my phone and it was filled with ads for various subscription boxes. The two I get most frequently is for Fab Fit Fun and for Hello Fresh.

I really love the song “85” by Andy Grammer. The lyrics are:

“There is a lie that I believed
The more that I got, the more I’d be free, free, free, free
So I’ve been away, making the green
See, the more that I get, the more that I need, need, need, need

I like to think that I am highly resistant to targeted ads, but it is a constant struggle to remind myself that I don’t need these products.

A few weeks ago, I kept getting, and still do get, ads for different tooth powders. I had never heard of tooth powder, yet the ad was so enticing that I almost paid $30 for a TINY container of tooth powder.

Subscription boxes and other products that these ads are often for have a way of eating up our money.

Here are strategies I use to resist targeted ads:

  1. Avoiding them. As I am scrolling through social media, I often will click hide on ads without really reading them.
  2. Wait 24 hours to purchase. Often the ads are trying to rush you to buy NOW. Just wait. Often after 24 hours you realize naturally that you really don’t need it.
  3. Comparison shop. I sometimes find myself convinced by the ads that this product is the best on the market. But if I take a moment to comparison shop, I typically find that the product is overpriced compared to other products.

Finally, having a written spending plan can help you navigate the appropriate time to make purchases on items that you may want, but do not need. If you would like help building a spending plan personalized to your needs, schedule an appointment with a Peer Financial Counselor at the Center for Financial Success. Visit our website to schedule an appointment!

Goal-Setting is like the One-Two Punch

The “One-two punch” is one of the first moves taught to a boxer in training because it tends to be easy and effective. It consists of quick jab with one hand followed by a cross punch (a much more potent punch than a jab) from the other hand. Secondly, this is a fundamental technique to build upon more complex techniques in the boxing world. As a former athlete this analogy resonates with me, because I have understood from experience the importance of the developing the fundamentals first.

Goal-setting in financial success is just that – the fundamental piece that sets you up to take on every financial situation. Successful goal setting is a multi-step process. People often say their goals are tasks like retiring with $1 million, visiting Paris, swimming with dolphins, saving for a new car, or starting an emergency fund. I would like to suggest that these are dreams not goals, and with a little bit of work they can become realizable goals. Just like the one-two punch doesn’t end with the first jab because the first jab doesn’t accomplish the job but rather sets up you for the second blow in the same way dreaming of what you want sets you up for the opportunity to create incredible goals. At the Center for Financial success we strongly encourage forming specific, measurable, attainable, realistic, and timely goals. Specific goals have a much better chance at being achieved then a vague goal. For example, if you want to go on a spring break trip and leave your goal at saying, “I want to go somewhere for spring break” you will be much less likely to actually achieve that goal then if you state, “For spring break 2019, I would like to go to Destin, Florida for 5 days and stay at a beach-side condo that costs $100 a night.”

Measuring a goal is the point where you set forth concrete criteria to see if you are staying on track to attain your goal. When you have established such criteria and then you use the measure to evaluate if you are on pace to achieve a goal it can create a sense of accomplishment that encourages you to keep pressing on towards your goal. Let’s assume you have ten months to save $1,000 for the trip to Destin. This would mean you need to save $100 a month therefore you can measure the goal by looking at your savings at the end of each month and see if you have save another $100 dollars.

The final three steps are attainable, realistic, and timely. This part involves examining your time frame for achieving your goal and determining if the time frame is realistic and attainable. For example, if spring break is 10 months away and costs $1,000, but you are in a position where you are only able to put $50 a month towards this goal then it is not attainable. At this point you should not ditch the goal, but rather determine how to proceed. Should you adjust your time frame? Maybe waiting until the fall would make more sense or you might determine that you have enough time to pick up an extra side job to stay on the same time frame.

When making realistic goals, your goals need to be personal to you. It is easy to build goals based off what everyone else is doing, but those same goals may not truly align with what you define as success and a full life. Do not be tempted to live someone else’s dream. Figure out your dreams, make them goals and write down a plan to accomplish them.

There is little you won’t be able to accomplish when you have written goals that you actively work towards and track your progress. Finally, it is tempting in the goal-setting process to make goals that are easily achieved and that never challenge you to reach them. I caution this because I am not convinced that you will be able to achieve the dreams that you will really want achieve. Do not let the fear of failure keep you from achieving tough goals!

At the WKU Center for Financial Success we are in the business of helping you make your goals a reality. Consider scheduling a free appointment with one of our Peer Financial Counselors. It is easy, just visit our website and fill out a form that takes 30 seconds and you could be on your journey to achieving your dreams!

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How {not} to spend your tax return

It’s tax season and for many of us that means a hefty tax return. What is the healthiest and most effective way to view your tax return?

Many people view a tax refund as free money and spend it almost as fast as it hits their bank account. But this attitude is dangerous. You work hard for your money all year, you have taxes withheld during that time, and now the government is giving you back some or all taxes withheld because you had more withheld than your tax liability.

Your tax return is an opportunity for you to create leverage in your financial life.

Here are 5 ways you can use your 2017 tax return:

  1. Open a high-yield savings account. You can use bankrate.com to research savings accounts and deposit the tax return money for safe-keeping. This can act as an emergency fund.
  2. Pay for school expenses. Your tax return could be used to pay off all or some of your WKU shortfall, allowing you to minimize the student loans you take out this fall.
  3. Pay off your credit card debt. It is not abnormal for college students to find themselves in credit card debt. Credit card interest rates are high and not paying hurts your credit score- use this as an opportunity to wipe the slate clean.
  4. Use it for an experience. Managing money is about using your money effectively to meet your short, intermediate, and long-term goals. It is okay to use part or all your return for a bucket-list item, if these other opportunities do not apply to you.
  5. Start a Roth IRA. A Roth Ira is a retirement savings account. Starting to save while you are young allows you to benefit from compound interest-and with a Roth IRA your money grows tax-free!

As always, for more information or to meet with a Financial Counselor, contact us at the WKU Center for Financial Success! We would love to sit down with you, go over your specific situation, and help you use your tax refund effectively!