By Kate Rhoads
Between textbooks, transportation and classes, many college students will inevitably encounter financial woes over the course of a semester. An article from CNN, published on Sept. 10, reported, “Carrying tens of thousands of dollars in student loan debt has become the new normal.” Brookhaven College is making a conscious effort to educate students on proper money management by offering a series of SkillsShops. The first took place Sept. 10.
Becky Knickel, professor of accounting and certified public accountant, led the first of a series of four Financial Literacy SkillsShops, where students gathered to hear tips on money management. Tuition and fees at public two-year institutions, such as Brookhaven, have increased in recent years, with a 29 percent jump between 2008-09 and 2013-14, according to a report by the College Board.
Many of the students at the SkillsShop said they were there to earn extra credit in psychology professor Bill Sigsbee’s classes. “I think it is easy for college students to get in over their head in credit card debt,” Sigsbee said in an email. “I just want to help them get a leg up on what the real world is like and learn how to manage their money.”
Knickel began the SkillsShop by stressing the importance of having a game plan for managing money. “Experts say that the most successful people are the people who have a plan in life,” Knickel said. She then outlined four steps essential to formulating a financial plan to manage money well.
Knickel said the first step is to figure out what one’s goals are. The reason for this, Knickel said, is because almost everything in life has a price tag, be it buying a house, living a healthier lifestyle or going to college.
Lisa Gomez, a Brookhaven student studying early childhood education, said one of her goals was to save enough money to invest in purchasing a house. She said listening to Knickel’s tips and examples made her realize she would need to factor in taxes and fees when buying a house. “[It] is an eye-opener if you didn’t have that expense before,” Gomez said.
Some things, such as going to college, have not only a monetary cost, Knickel said, but also an opportunity cost – time one could spend working and earning money lost to college obligations such as class and studying.
After determining one’s goals, Knickel said, the next step is to assess one’s current situation. This includes not only the bank account balance and the amount of cash in hand, but also any debt, recurring payments and future plans. Establishing the starting point is not always pleasant, Knickel said. “Sometimes the hardest conversations … start with what are your obligations as well as where you stand money-wise,” Knickel said. Ignoring these obligations, Knickel said, does not make them go away.
Separating one’s needs from one’s wants is an important part of this step, Knickel said. Sometimes a need can evolve into a want, which she illustrated by saying that if one is hungry and decides to stop by Subway because it is the quickest, but not necessarily the most cost-efficient choice, the need for sustenance can easily become a want.
Knickel continued by revealing the third step – making a budget and setting a timeline. Knickel said her best advice for making a budget is to keep it simple. Otherwise it will be difficult to follow.
She suggested a variety of methods, such as using envelopes with cash, a spreadsheet or a free online program. Knickel said the key is to pick a system that works for the individual. Knickel also recommended setting a timeline that is reasonable. “It’s kind of like a diet,” she said. “If you try to live on 400 calories, you’re not going to be on that diet long. A budget is the same way.”
The fourth and final step is to take action, Knickel said. She expounded on this by sharing a tip from “Save Wisely, Spend Happily,” a book by CPA Sharon Lechter: “Take your credit cards and put them in a plastic bowl of water, and put it in the freezer.” Having to thaw out the cards is a way to curb impulse spending, Knickel explained.
Gomez said she saves her receipts and budgets everything she spends. “For me, personally, if I write it down and I see it, it keeps me more alert,” she said. In addition, she said that she withdraws a certain amount of cash if she knows she is on a limited budget and leaves her debit cards and credit cards at home.
“My number one suggestion,” Knickel said. “Leave those credit cards at home.” Times and dates for other SkillsShops in this series can be found at brookhavencollege.edu.