Spending Diet: A Guide

by Nicole Ryan, Student Blogger

It’s Friday night and my roommates and I have decided to invite our neighbors over for a movie night. Everyone is just arriving when I get a not so happy phone call from my mom. I step outside to talk to her while she, in her very Italian way, informs me she just received my credit card bill in the mail. Although the card is in my name, my mom and I take turns making payments on it considering I’m on a college budget and the card is only supposed to be used for essentials. However, with the holiday season having been just behind us at the time, it seems as though I had gotten a little carried away with the credit card.

The card which used to have only a balance of $200 on it, now suddenly had a balance of $600, quickly approaching my $800 limit. Sure, I had used the card for grocery shopping and gas, but how could I have charged so much? As I was on the phone with my mom, she began to read through the list of charges to the card; $10 at Starbucks, $30 at Forever 21, $15 at Target, and so on. It finally dawned on me just how out of control my spending had gotten within the past few months. Each time I used my card I would justify it by saying, “Oh I never use this card, it won’t hurt to use it just this once.” Well “just this once” started to happen on a regular basis, and I had no awareness of it until I was hit with that $600 bill. This is when I decided my spending needed a drastic change.

I love the idea of a spending diet because not only does it give you a way to manage your finances, but it also gives you a whole new outlook on what is most important in your life. When you take time to reevaluate your spending, you are ultimately reevaluating your priorities. Spending diets are great to do when things seem to be becoming increasingly out of control. They’ll help you re-focus and get back on a healthy spending track.

Here are 8 easy tips to follow when beginning a spending diet:

1. Make a list of Wants vs. Needs
Find out what your necessary spending needs are. When on your spending diet, try to stick to only your needs list. If you want, you can allocate a small budget for your wants list, as long as this won’t be hurting your progress.

2. Set a timeline
Decide how long you want to participate in the spending diet. Researchers suggest it takes 30 days to break a habit, so if over-spending is yours, try starting with a month! Some people go on spending diets for longer, even up to 2 years!

3. Set a limit & Stick to it
Even when buying the essentials, make sure you have a set limit for how much you want to spend. This limit can be either on a weekly or monthly basis, whichever is most easy for you to track. Remember to stick to whatever limit you set. You aren’t going to do any good if you go over!

4. Should I buy it? / Do I need it?
When thinking of making a purchase, make sure you ask yourself, do I need this?  Do I have anything similar to this? What is this purchase going to add to my life? Make sure the purchase you make is something you actually need and will use. Useless purchases are what get many people into financial trouble.

5. Can I find it cheaper?
Don’t be ashamed to bargain shop! If you’re looking to make a purchase but the price isn’t quite in your budget, investigate around. Another store may have the same thing for much cheaper. Considering most stores have online websites now, it makes it easy to compare prices right from your own home.

6. Make a Decision Card
According to blogger Anna Newell Jones, one of the best things you can do when trying a spending diet is to create and carry with you a decision card. Jones describes how to make the card by saying, “Start in the upper left corner and then walk your way through the questions and answers to help put a pause between you and the purchase. Think it through and you’ll find yourself with less crap, less impulsive purchases and more money left to pay off debt.” Some of the questions on the decision card are, “Do I need it?” “Is it expense worthy?” “Do you have any debt?” and so on. Here’s a link to Jones’ blog and her example of the decision card.
http://andthenwesaved.com/should-i-buy-it-take-along-printable-decision-card/

7. Find your motivation
Why do you need to go on the spending diet? Maybe it’s because of debt, or maybe you just want to spend less money. Whatever the reason is, identify it and use that as motivation to stick with your spending plan.
www.saveup.com is a great option if you’re looking for some money saving motivation! SaveUp allows you to link your Student Loans, Mortgages, Credit Card Accounts, Savings and 401k accounts in order to earn rewards points for each dollar that you pay towards increasing your financial well-being. You can also play Instant-Win Games, Lotteries and a Super Jackpot with Your Accumulated Points with the potential of winning cars, vacations, and more!

8. Plan ahead & maintain a savings
One of the best ways to avoid over spending is to plan ahead. Spontaneous shopping trips can lead to you spending much more than you originally anticipated. Try to know what you need to buy before you get to the store. That way you can stay focused and on track, not getting as distracted by things you don’t need.
It’s also important to maintain your savings. Any money not being spent on essentials or paying off existing debt should be set aside in a savings account, that way you always have a backup in case of emergencies. I interviewed my best friend and ask her what she thought about a spending diet. I explained to her what a spending diet was, that it’s a financial plan where you try not to spend money on anything other than essentials. After telling her a little about it, I asked if she thought she would ever try one.

Her response was, “Yeah that sounds really helpful. I know I could use a good spending diet!” I then decided to ask her what technique she found to be most useful to help her not over spend. She explained, “Probably having a savings account I can’t touch. That way when I’m putting the money aside I’m not tempted to try and draw any extra spending money from the account.”

I think Jess makes a good point when she says that it’s important to not be able to take money from your savings for extra spending. That’s what is so great about a spending diet. You are able to evaluate your spending habits and change them for the better.

We can all be smarter spenders, pay off that debt, and get our finances back on track. The important thing is to know what is and isn’t worth spending our money on. Own your relationship with your money and you’ll be much more likely to have financial success!

Here’s a list of some helpful websites to guide you on your spending diet journey!

How to Fund Your Study Abroad Trip

by Danielle Meltz, Student Blogger

Studying abroad is more than exploring a new city and living somewhere else for a few months. It’s one big adventure that combines finding more about who you are, while helping you achieve what you want out of college. It helps you learn how to adapt to new cultures and makes you a more appealing applicant for future jobs or graduate school. Not to mention the friends that you make and the experiences you have will surpass every expectation you have going into it.

The truth of the matter is, I believe, that you can’t afford to not go.

study abroad

Here are the ways I funded my study abroad experience:

Exhausting every opportunity your school has for you

Financial aid

If you are someone who receives financial aid, you will likely be able to transfer that money over to your study abroad program. This is a great way to make studying abroad more feasible if you chose a program that costs less than the university you are currently attending.

Scholarships

Universities often set aside a large amount of scholarships for people who want to study abroad. Look at your schools study abroad finance page (here’s CU’s) and talk to your financial aid office about all the possible scholarships you are eligible for. Some scholarship deadlines are more than a year before the program, so the earlier you look the better.

 

Personal savings

If you are already paying for college yourself, it can be difficult to save money to fund your study abroad experience, but it is possible. One of the biggest struggles of funding your own study abroad trip is having all of the money upfront. The trip might work out to be cheaper, but the flights, housing, and food might need to be paid before you even leave. That along with not being able to work while you’re abroad makes the trip look unfeasible to a lot of people.

This can be avoided by doing two things: knowing how much you need, and splitting up payments. Instead of taking your ‘estimated cost’ at face value, do some research into it. How much do plane tickets actually cost? Will you be traveling apart from your trip? What activities will you are doing abroad?

Then, split up the costs. If you’re planning for a trip that’s a semester away, try buying plane tickets one month, take a month off to save, pay for housing the next month, and so on. This helps you work towards smaller goals instead of the larger more intimidating number. Saving for two semesters in the span of one is difficult, but a great way to focus on it is by readjusting how you spend your paycheck or allowance. As soon as you receive it set money aside for things that are not adjustable, such as rent or tuition. Then put 50%-70% into your savings account. This forces you to be more frugal when it comes to what you spend money on, and makes you realize how much more cost efficient grocery shopping might be over eating out.

 

Be aware of hidden expenses

Credit cards

Something I realized really fast while I was abroad, but took a while to fix was using my credit card. The main idea here – avoid withdrawing money from an ATM at all costs. Withdrawing money in a foreign country can cost around 20% of what you take out.

You can avoid this by going to a bank when you get there and exchanging money, which also helps you visualize how much you’re actually spending on your trip.

Trinkets

Visiting a market the first day you are in a new country might use up a week’s worth of expenses. Buying things while your abroad is a great way to bring back memories with you, but you do not need little touristy trinkets or a gift for everyone you know back home. Go in with an idea of how you want to spend your money, be it experiences, food, or more travelling and you’ll be far better off half way through your program.

I’ve never met anyone who’s ever gotten back from studying abroad and said they wish they’d never done it. It gives you more experiences and stories than you could ever re-tell, as well as opening you up to a ton of new opportunities. If you don’t think studying abroad is possible, talk to an advisor and look into it before you shut the idea down. The fact that you’ve read this article shows that you’re already on the right path.

 

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5 Things Every College Student Should Know About Retirement

by Danielle Meltz, Student Blogger

As stressful as Gen Chem is right now, your retirement is going to be a whole lot worse if you don’t start thinking about it now. The dream of retiring on a beach, sipping Mimosas and smoking cigars doesn’t come easy. However, the quicker you do it, the less money you’ll have to put into it.

future past presentHere’s an example from CNN Money to show you the difference saving at age 25 and saving at age 35 makes:

If you start a retirement plan at the age of 25, and put aside $3,000 a year for 10 years, and then you stop. By the time you reach 65, your $30,000 will have grown to $427,000. (Assuming it is a tax-deferred retirement account at an 8% annual return.)

If you start a retirement plan at the age of 35, and put aside $3,000 a year for 30 years, and then you stop. By the time you reach 65, your $90,000 will have grown to $367,000.

Saving at the age of 25 provides you with a lot more money, while putting 1/3rd of the money in.

 

Retirement may seem like a lifetime away, but it’s a good idea to start as soon as you can. Here are 5 things ever college student should know about retirement:

1)      Should a retirement plan be your first savings account?

While retirement is going to be a big priority in your life, in most cases you cannot withdraw the money that you put in. This means if you currently have student loans, saving money to put towards rent and emergency situations is more valuable than having a healthy retirement fund. While starting in your 20’s or during your first job, is the ideal time to prepare for retirement, you should save from 3-6 months of expenses as an emergency fund before you start investing.

2)      How do I get started?

Let’s break down the two main options. IRA vs 401k

IRA (Individual Retirement Account): This is an individual plan which can be either a Traditional IRA or a Roth IRA. IRAs are the biggest option with most college students who are not working full-time jobs. A Traditional IRA gets taxed when you put money in, and a Roth IRA gets taxed when you take money out before you are 59 ½.401K egg-smaller

The question here is whether or not you think you will need the money, for education, or housing, before you are 59 ½. If the answer is yes, then a traditional IRA is right for you. However, if this money is solely for retirement, the Roth IRA might bring more savings.

401K: This is an employer-based plan through full-time and some part-time jobs depending on the employer. The reason employer based plans are often the first and best option is because they are easy, it comes out of your paycheck automatically before taxes. There might be a company match available, which means that they will match up to a certain limit, say 4% for example. This money builds up in your account, without you having to sacrifice more to hit your retirement goal.

3)      Where do I start a plan?

If you have an employer who might be able to match contributions, they are the best place to start at. If you do not though, the real question is which bank to start a plan?

The University of Colorado’s Elevations Credit Union might be a good place to start for new savers. They are used to college students seeking advice, and you can make appointments through their advisory website. You can set up a retirement fund anywhere even if you plan to move out of Colorado when you graduate. It might be beneficial however, to talk to an advisor about the best place to start a fund.

4)      The biggest mistake college students make

Not making a long-term commitment. This can mean not putting enough money into your retirement account, or buying an investment and then quickly selling it due to an unanticipated need, which might lead to losses on your money. Emergency accounts are vital for this reason. You need to be able to commit in the long-term, while have emergency savings you can tap into incase something comes up.

5)      Is social security still a thing?

Social Security currently plays a role in retirement; however the amount available has decreased and will continue to do so for over the years to come. Although the program will still be running in the future, the best decision is to rely on your own individual savings for retirement.

Overall, the biggest way to help you prepare for retirement is creating a habit of saving. By putting money into your retirement account first, instead of at the end of the month. This teaches you how to adjust the money you spend each month. This may sound easy, but it takes years of learning how to budget and financially plan before most people are comfortable with putting their savings before their immediate needs.

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