Spring Clean Your Finances

by Niomi Williams, Associate Program Director

Spring is here! Some people will be “spring cleaning” their living spaces, but we think you should also consider giving your finances a spring cleaning, as well! Here a five tips on how to clean up and organize your finances:

1. Check your credit report
Go to annualcreditreport.com and get your FREE credit report. Your report will contain previous address, loans, and any other accounts open in your name. If you see an account opened that you think may be in error, you will have the option to dispute it. It’s important to check your credit report routinely to check for identity theft or fraudulent activity (accounts opened in your name that you didn’t authorize). Note: when you enter your information to get your credit report, they will ask verification questions. Some of these questions are trick questions, such as “With which company did you have a mortgage with?” even if you’ve never had a mortgage. You would select “none of the above” option and continue answering the verification questions.

2. Create a financial to do list
A few things to include on your list:

  • create an emergency fund of at least $500-1,000; this money should only be used in an emergency
  • consider opening a Roth IRA (Individual Retirement Account); it’s never too early to start socking away money for retirement
  • calculate your net worth; your net worth are your assets (savings, car, stocks, jewelry, electronic equipment) minus your debts (student loans, car loan, credit card debt). You can calculate your net worth using our calculator.
  • pay any late fees and/or fines; don’t let parking tickets or library fines accumulate–the sooner you take care of them, the better.

3. Review next year’s financial aid package and/or you plan for paying for college
Students should start receiving their financial aid packages soon. Review these and make thoughtful decisions on how to pay for tuition and costs. Remember, you don’t need to accept everything that is offered. For example, if you’re offered a $10,000 federal student loan, but only need $5,500 to cover your out of pocket costs for college, then only accept $5,500, not the full amount offered. Additionally, try to find a few more scholarships to apply for and consider the new payment plan.

4. Plan for next year—roommates, housing, job, internship, etc.

  • If you’ll be living off-campus next year, you should have your housing and roommate situation pretty figured out by now. If not, it’s not too late! You can visit the Off-Campus Housing and Neighborhood Relations and they can help you find housing for next year.
  • For those students interested in studying abroad, make sure you plan for the semester you’ll be gone—you might need to find someone to sublease your place, find somewhere to store your stuff, and let your roommates know that you’ll be out of the country for awhile.
  • If you’ll be graduating within the next few semesters, make sure you’re doing everything you can to have a great resume. Along with good grades, consider volunteering or getting an internship, to make you a great future candidate for your dream job.
  • If you haven’t started a budget, now is a great time to start.

5. Clean your space
This one is simple: throw away papers you don’t need anymore, start selling unwanted items on Craigslist, buy a few plastic totes to store things in. Getting—and staying—organized will make your life much easier in the long run! You’ll be happy you did once May is here and it’s time to move.

spring cleaning

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A Smart Budgeting Tool: The 50/30/20 Rule

by Yuchen Wu, Student Blogger

Last weekend, I found a secret when I accompanied my friends shopping at the Flatiron Crossing Mall. Yingying is picky and she only wants to pay for the perfect apparel, whereas Cyril always opts for something affordable and doesn’t care about “perfection.” As a result, Yingying bought a $60 blue woven scarf while Cyril bought $30 jeans and some cheap T-shirts. While I was surprised about the two’s distinctive shopping philosophies, I started to wonder what their budgeting habits look like. What astonished me was that both of them felt that they only spend about 30 percent of their budgets on shopping.
Woman Money in Wallet

It reminds me of the 50/30/20 rule, which basically states that 50 percent of one’s budget should be spent on “needs,” 30 percent should be spent on “wants,” and 20 percent should be saved. The rule is coined by a Harvard bankruptcy expert Elizabeth Warren and her daughter Amelia Warren Tyagi in their book “All Your Worth: The Ultimate Lifetime Money Plan.” My two friends, apparently, are fans of this rule and they are benefitting from it. So, I thought I should share this smart rule to help people with their money management.

Basically, the 50/30/20 rule outlines the following four steps:

Step One: Calculate Your After-Tax Income

In general, your budget is the amount you collect from all your paychecks after taxes. This after-tax income will be how much you can spend.

Step Two: Limit Your Needs to 50 Percent

A need is any payment that would severely impact your quality of life, such as housing, insurance, utilities, and groceries. According to the rule, spending on the “needs” should be no more than 50 percent of your after-tax income.

Step Three: Limit Your Wants to 30 Percent

A want is any payment that you can forgo with only minor inconvenience, like beautiful shoes, a movie, or a trip to Paris. Sometimes you will buy a “want” that upgrades to a “need.” For instance, you want to have a faster speed of internet or an upgraded cable bill. Although 30 percent sounds great, you may spend more on “wants” than you think.

Step Four: Spend at Least 20 Percent on Savings and Debt repayments

According to the 50/30/20 rule of thumb, you should spend at least 20 percent of your after-tax income paying your debts repayments, such as credit card balances, or saving money for emergency use.

All in all, where and how much to spend money is a deeply personal thing, but knowing this simple “rule” can help with your money management!

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4 Bad Habits That Keep You From Saving Money

by Yuchen Wu, Student Blogger

Have you ever had this moment where you said to yourself “Geez, how did I spend so much money this month?” when paying off your credit card balance or checking on your banking accounts? Well, I have…and that is not new to me at all. In fact, I had to make a serious “investigation” on all my transactions, hoping to find some sort of scam or fraudulent charge. Not surprisingly, I always found out that I overspent on something unnecessary. So, let’s face it – we all have bad habits that keep ourselves from saving. But, no worries–let’s break them and let them no longer hurt us.

So, what are the common bad habits?

1. Buying things you don’t need.

This usually happens due to impulse spending. Do you really need those shoes? Think about the difference between wants and needs. Take a moment to determine whether you’re wasting money on something you don’t actually need.

2. Buying things you already own

Do you need to buy lunch or dinner at a restaurant when you have food in your fridge? Do you need to buy coffee at Starbucks when you can make it at home? Take a moment and really think about it. Stop buying things you already own can help you save so much money.

3. Not budgeting

Not having a budget in place can cause overspending. There are many different ways to budget—pick the style that works for you.

4. Not knowing how much money you have

Some people don’t even know how much money they have. This can be the worst thing because you might easily spend more than you have. Knowing how much you have will allow you to keep better track of your spending habits and help you steer clear of falling even deeper into debt.

Changing bad habits entails your readiness to act, and it’s frequently been said that “it takes just 21 days to change a habit.” According to Bankrate, “habits change more quickly when you’re in the action stage versus the ambivalence or preparation stages that come before.” To catapult you into action, Bankrate recommends this three-step approach daily:

  • Create a positive picture in your mind of the result you want, and act as if the bad habit is gone. Use a negative picture of the current stressful result of the bad habit to push yourself further toward action.
  • Identify and focus on your positive financial habits, as proof you can do things the right way.
  • Create simple rules to fall back on when tempted, such as: “Don’t browse shopping websites until all my bills are paid this month.

Give it 21 days to break your bad money habits—and hopefully you’ll soon be watching your bank account grow!

 

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20 Things to Do Instead of Spending Money

by Yuchen Wu, Student Blogger

Amusement Park Ride

 

Working aside, people may have already planned what they want to do for this summer. If you still don’t have any plans yet and don’t have much money, here are some 20 ideas that won’t bust your budget:

1. Plant some flowers in your garden.

2. Use YouTube for karaoke.

3. Have a movie marathon with close friends.

4. Visit a county or state fair.

5. Take a photo every day for a summer or a year.

  • Here is an app that can remind you to take a photo every day. If you need inspirations, check out a list of photo-a-day here.

6. Visit a museum on a free day.

7. Wash your car at home.

8. Listen to a podcast.

9. Go on a bike ride.

10. Go hiking.

11. Read a book.

12. Practice yoga at home.

13. Go camping in your backyard.

14. Visit your family or friends.

15. Dance in the rain.

  • Bonus points if you do it where your neighbors can see you.

16. Play with your pet.

17. Meditate.

  • Find free meditation music online.

18. Gaze at the stars.

  • Check this link for the next meteor shower.

19. Write a journal or finally start a novel.

20. Stay in touch with a friend or loved one with a handwritten letter.

Check out MindBodyGreen.com and SparkPeople.com for more ideas!

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