When it comes to money, it’s safe to say that if it’s available, it will be spent.
Money is a solution in some ways, but to college students, when it’s the solution, it can also be the problem. When students start college, they are made aware of tuition, book cost and housing. All of these things are necessities, but students may not be aware of the cost of their wants. Dr. William L. Davis, a professor of economics at UTM, explains that many factors contribute to college students’ general inability to manage their money properly.
“Many college students have never had to do it before and are simply inexperienced with managing their money, leading to lots of financial mistakes,” said Davis. “This is complicated by the fact that the marketplace is flooded with so many new products that lure students into overspending.”
Although a student’s wants can get in the way of managing their money, taking care of present expenses with borrowed money can also grow into a problem, as this can affect future expenses. Dr. Mahmoud Haddad, a professor of finance, explains that a loan can cause present and future money managing issues.
“To successfully manage money, students need to understand one of the most important principles of managing money, which is Time Value of Money,” said Haddad. “That is, if we borrow one dollar today, it must be paid in the future–upon graduation for students–with added interest. This can lead to paying two dollars for each dollar we borrowed, and sometimes more depending on the loan interest rate. The less a student borrows by budgeting his/her expenses on non-essential educational expenses, the less financial stress and difficulties he/she will face during college life and after graduation.“
For those students who are having money troubles, Haddad says that it would be beneficial to students, especially freshmen, to take a course in personal finance.
Davis advises that student try the old-fashioned method of setting money a side or saving for a “rainy day.”
“Develop a habit of saving a little bit of money every week, even if it’s just $10 per week,” said Davis. “Doing it on a regular basis will pay big dividends down the road. At the end of each year, students who do this will be able to see the fruits of their efforts. Foregoing one McDonald’s value meal or a couple of Starbucks coffees a week, and instead putting [the money saved] in a savings account, is all that one needs to do to get started in developing a savings habit and keeping it for life.”
Rodney Freed, an instructor of Communications, agrees that saving money for a “rainy day” is important.
“Have a ‘rainy day’ fund stuck away for emergency or unexpected things,” said Freed.
Managing money is difficult for people of any age, and for college students in particular, money managing has to be put on an already long list of things that need to be done. Unfortunately, there is no way to save money without effort. So if students don’t try to keep a hold of their money and manage their expenses, then money troubles will always be present.