10 ways to manage your money

Penn State University
You just earned your first paycheck from your new college job and you feel like you are on the top of the world. Now you can finally afford that new CD, a trip with your friends to the movies and the new gadget you have been eyeing. But wait … There’s the credit card payments, your low bank account, the interest on your student loan and the telephone bill…Sigh.
While you don’t have to save every penny you earn in college, money management is very important. Here are 10 tips on how to effectively manage your money in college—and still afford the things you crave.
1. Make a list of your wants and needs.Can’t figure out the difference between the two? Anything necessary for your everyday life is a need. Needs include groceries and money to pay for bills and loans. Wants include items you would like to have, yet could live without. These include CDs, movies and fast food.
2. Calculate how much money you earn each month. Be sure to include paychecks if you have a job, as well as money from your parents and other sources.
3. Determine how much money you must spend each month on needs. You won’t know how much money you can spend on your wants until you know how much you must spend on your needs. Try to be as accurate as possible. Only include an item as a need if it is an absolute necessity.
4. Plan a monthly budget, and stick to it. Your budget should be set up like a chart. In rows along the horizontal axis, list each month. In the vertical columns, list each need you have. In the box corresponding to the month and the need, list how much the need will cost. Once this is set up, calculate the total amount you must spend on needs for the month. Subtract this number from your monthly income, and bingo! You are left with the total amount you can spend on wants for the month.
5. Open a savings and a checking account. There are advantages to both types of accounts, which is why you should open one of each. After you calculate how much you will spend on needs and wants, put any leftover money into a savings account, where you’ll receive higher interest than if you put it in checking. The money you plan on spending on needs and immediate wants belongs in a checking account to access with your debit card. “The advantage of debit cards is you don’t have to carry money,” says John Adam, senior financial consultant at PNC Bank. “Also, debit cards tailor to the right purchase amount. You can use a debit card rather than having to take out $20 and only using $14 for a purchase.”
6. Use checks and your debit card for all major transactions. Checks, as well as debit cards, are connected to checking accounts. Many utility companies may only accept checks for payments. Thus, it is important to have a way to pay your bills. But debit cards are handy, as they can also be used to withdraw cash at ATM machines. University of Pittsburgh freshman Liz Preis vouches for the usefulness of debit cards. Preis worked two jobs and deposited the majority of her money in her checking account. “I carry a little cash but use my debit card for most of my larger purchases,” Preis says. She likes her debit card because there are no monthly fees, and she won’t have a bad credit rating if she mismanages it.
7. Keep a careful record of what you buy. This is especially important if you use a debit card. Make sure you know exactly how much is in your account so you don’t overdraw your account. If you write a check and don’t have enough money in your account, the check will bounce. Many businesses have service charges for handling a bounced check. You will have to pay the original amount of the purchase plus the service charge.
8. Limit credit-card usage. There are distinct advantages to having a credit card. It’s safer to use for Internet purchases, and you can establish a good credit rating by being on time with your payments. That’s Jason Yamaura’s plan. This Brooke Community College freshman works 25 hours a week at Radio Shack. He uses his credit card primarily as a method for establishing a good credit rating. “I put $20 a month on my credit card to build credit,” Yamaura says. The major disadvantage of a credit card is that if you fail to make a payment, your credit rating will fall. The solution? If you do get a credit card, use it for only small purchases, and make every payment on time.
9. Pay all your bills and loans on time. If you fail to pay your credit-card bill or other bills and loans, your credit rating will fall. This can affect you for the rest of your life. You may be rejected from future credit cards, as well as mortgages and other loans.
10. Always look for cheap alternatives. It is common sense to shop around and get the best deal. This may mean purchasing generic food brands, buying your laundry detergent in bulk, or buying your clothes at Wal-Mart rather than The Gap. Most likely, college is the first time you will be financially independent. With proper planning and use of money management techniques, you will be successful at balancing your budget. Remember, you can spend your money on whatever you want. But try to spend it wisely.

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