THINK Before You Swipe!
November 20, 2020
Are you looking to get a credit card? Excited to just swipe your card and not have to pay cash? Well, before you go on a shopping spree, here are some things to consider!
When selecting a new credit card:
- Read the terms! Many credit cards offer great deals at the beginning of your contract, so read the fine print and make sure you understand what the interest rate is after the beginning deal expires.
- APR: This is the annual interest rate for borrowing money.
- Is the APR fixed or variable? Variable APR’s can change over time, while fixed will be the same the entire time you have the credit card.
- Rewards programs: Some cards will offer rewards on travel, shopping, give cash back, etc.
- Is there an annual fee? So much for the rewards if you wash out those benefits with a fee!
- To start exploring your options, NerdWallet is a great resource: https://www.nerdwallet.com/the-best-credit-cards?trk_copy=hpbestcc
You might be feeling overwhelmed after reading all of the considerations, but there is no need to be. Here are a few tips to best manage your credit card:
- Only charge what you can pay. If there is one thing you remember, remember this! Charging more money to your card than you have is where things can go downhill, and fees pile up quickly. It might be tempting, but THINK before you swipe!
- Pay the balance each month in full. This is how you avoid the interest expenses talked about above.
- Read your statement each month, and make sure the charges are actually yours.
- If you think you may forget to pay your bill, sign up for e-bills and automatic payments. Or set monthly reminders on your phone so you don’t slip up.
Check out the blog in the future to learn more about using your credit card to build your credit score and credit history, so you can be ready to make bigger purchases in the future!
Peer Financial Counselor, Class of 2022
Hoos Building A Budget?
November 13, 2020
An essential step in having a better relationship with your finances is understanding the importance of having a budget. When most students think of budgeting they think of it as a restrictive spending plan that doesn’t allow them to go out with friends or make fun purchases. However, a budget built specifically for you will not restrict your spending or prevent you from having fun! One of the most popular budgeting plans is the 50/30/20 budgeting rule, where 50% of your income goes towards your needs, 30% towards wants, and 20% towards savings and paying off debt. The 50/30/20 rule can be adjusted for your specific needs, such as increasing your wants or decreasing savings (however it’s never too early to start saving!).
Below is a chart depicting the different categories and the type of spending that is attributed with each one. Needs and wants may differ by circumstance and person, but generally are as shown below.
Steps in building a successful budget:
- Identify all sources of income. This can be from a part-time job, left over scholarship funds, or savings from a summer internship/job.
- Calculate your expenses for a typical month or week, depending on how often your spending fluctuates per week. This Interactive Spending Worksheet is a great tool to use to quickly identify and add up all your expenses and check if you’re overspending.
- Once you calculate your expenses, be honest with yourself and identify your spending habits and see where you could cut down on spending. This is sometimes difficult and it takes time to fully adjust your budget to where you want it to be.
- Categorize your spending into needs, wants, and savings. Sometimes it’s necessary to cut down on wants to be able to cover your needs or maybe you would like to start saving or start paying off some your student loan debt.
- Once you’ve categorized your spending and come up with some new rules for yourself, (only eating out twice a week or cutting out unnecessary subscriptions) it’s time to put that new budget to work!
- Try out your budget for a least two weeks and see how well you’ve stuck to it! If it isn’t working out for you, re-evaluate your budget and see what changes need to be made to make it work.
- You can use excel to keep track of your spending or use budgeting apps such as Mint or PocketGuard.
- You’re more likely to stick to your budget if you start by making small changes to your spending habits and if you create your budget with a goal in mind.
- It’s okay if you deviate from your budget at first as it may take time to adjust your spending habits!
Peer Financial Counselor, Class of 2021