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Problem-solving series: getting finances in order

Problem-solving series: getting finances in order . University Life Cafe. The challenge.

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Problem-solving series: getting finances in order

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  1. Problem-solving series: getting finances in order Problem-Solving Series University Life Cafe

  2. The challenge • For many college students, they’re out of their family homes for the first time. They mostly live on limited incomes and must often borrow in order to cover the tuition, books, technologies, housing, and other costs. • Credit card companies may be offering students credit for the first time, with sweeteners like freebies and low initial interest rates. Research says that students are accruing sizeable educational loan debts. • This slideshow will focus on some financial ideas to help students start to get a handle on what they are facing. Problem-Solving Series

  3. Some Financial concerns • Budgeting funds for present needs • Putting an emergency fund in place • Balancing a checkbook • Using credit wisely • Getting sufficient insurance coverage • Saving for the future / considering retirement • Gathering and protecting financial information • Asking for professional financial advice • And others… Problem-Solving Series

  4. Short-term, mid-term, long-term • The contents of this slideshow focus on short-term (present) financial issues and goals; mid-term issues and goals (several years to give years out), and long-term issues and goals (up to a decade out). • Financial planning by definition involves consideration of the near- mid- and far- future. Problem-Solving Series

  5. Creating a budget • A basic budget considers the in-flow of money (what is earned) and the outflow (what is spent). • Those living within budget spend less or as much as they make. Those living beyond their budget spend more than they make. Their financial commitments cost more than they are able to cover with their funds. • A basic budget breaks down expenditures into categories. Plenty of basic budgeting worksheets are available online, but the idea is to account for everything going in or out. Creditors who are owed money should also be listed. Problem-Solving Series

  6. Creating a budget (cont.) • After everything is accounted for, the question is: Is there a surplus or a shortage? • Does the budget have room to accommodate saving for a “rainy day”? • Is the budget over-spent in any particular areas? • Are there unforeseen costs and expenditures that may threaten the correctness of the budget? • Are there items that are extra in the budget and that are unnecessary? Problem-Solving Series

  7. Building an emergency fund • Financial advisors generally suggest that an emergency fund contain moneys to cover 3 – 6 months of typical costs. A majority of Americans live very close to the financial edge and have no room for financial emergencies. • Based on the budget, a student should have a clear sense of their outflow and may extrapolate a total need for his / her emergency fund and build from there. Automatic deposits may be the easiest way to build this fund, before a person is tempted to spend the moneys. • It may help to start small in building an emergency fund. Even a financial cushion of some $500 - $1,000 can be very helpful in case of unforeseen and unavoidable events. Problem-Solving Series

  8. Balancing a checkbook • The key to maintaining accurate records in a checkbook is to record all deposits, all expenditures, and all interest payments. • There are electronic tools that may help a person maintain electronic checkbooks. Many bank electronic checkbooks maintain quite accurate financial information. Problem-Solving Series

  9. Using credit wisely • Students are building their credit identities as they borrow moneys for their studies and as they use various types of credit. Home mortgages, car loans, credit cards, and other loans all involve a credit record that follows a student. • Not all credit is the same. Relatively low-cost credit may involve educational loans and home mortgages. Car loans may involve a mid-range of credit costs. Credit cards are expensive credit, oftentimes, with double-digit costs for moneys. Problem-Solving Series

  10. Using credit wisely (cont.) • People get into credit trouble when they apply for more credit than they can afford. If they use credit in an uncontrolled way, they may find themselves over-extended and unable to pay back their loans. • Late payments, missed payments, and defaults on loans take a heavy toll on a student’s credit profile, which can affect future and current loans and credit rates. • Credit histories are now checked for various jobs, security clearances, and a number of other aspects which can affect a student’s present and future opportunities. Problem-Solving Series

  11. Getting Sufficient insurance coverage • Insurance is important for students to protect them from unforeseen accidents or changes in their life situations. The types of insurance needed may depend on each student and his / her particular needs and situations. • Rental insurance protects what a student owns. • Homeowners insurance protects the home and property. • Auto insurance covers a range of financial interests related to driving a vehicle. Problem-Solving Series

  12. Getting Sufficient insurance coverage (cont.) • Medical and dental insurance provide coverage for accidents, checkups, and health maintenance endeavors. • Life insurance protects the survivors of a student’s family if a student dies. • Disability insurance covers a student against some of the costs from falling ill or suffering an accident. --- • There are many types of insurances not even listed here, and it’s important that students actually research their unique insurance needs. Problem-Solving Series

  13. saving for the future • The compound interest aspects of money help a student magnify the value of their savings throughout the years. • Numerous investment vehicles exist—mutual funds, equity funds, fixed income funds, real estate funds, money market funds, and others. • Different investments involve different risks and different levels of potential gain. • There are retirement calculators that people may explore to see how much they should be saving to maintain a particular lifestyle level once they reach retirement. Problem-Solving Series

  14. Gathering and Protecting financial information • Students need to gather their financial information. They need to check their credit report, with a free annual one available at Annual Credit Report. • They may check their financial record with Equifax, Experian or TransUnion, the three main credit reporting agencies. • Students need to protect their financial information because this can be exploited by others through identity theft and fraud. Such breaches may take many years to correct, and much may be lost. Students need to protect their information with care. Problem-Solving Series

  15. Asking for professional financial advice • The financial world involves plenty of complexities. It is a good idea to speak with professional financial advisors and specialists who specialize in the diverse areas that make up a financial life. Problem-Solving Series

  16. Connection to counseling services • Counseling ServicesKansas State University232 English/Counseling Services BldgManhattan, KS 66506-6503785-532-6927counsel@k-state.edu Problem-Solving Series

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