Money Savvy Series: It makes cents
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“The real world” is a phrase that either strikes fear into the hearts of reticent millennials or inspires them to tackle the oncoming challenges head-on. Most have acted as dependents until now, relying on more experienced and generous parents or guardians for many forms of support. But as the years tick on and as more personal responsibility is relinquished to these burgeoning adults, they ultimately arrive at what most would describe as the most independent state thus far: post-college planning.
As May 2017 draws near, a quarter of the University’s students are currently engaged in some form of post-graduation search following their rapidly approaching graduation. With graduating comes independence, and with independence comes financial considerations that haven’t necessarily been at the forefront of many students’ minds.
The Alumni Career Services within the University’s Career Development Center (CDC) started the “Money Savvy Series” in conjunction with faculty members from the School of Management. On Feb. 9, Feb. 16, and Feb. 23, professors and CDC staff covered a myriad of financial topics from 12-1 p.m. in Walls Lounge, which was filled each week with students eager to become familiarized with important information regarding the balance between spending, budgeting, and saving money, as well as the variety of financial responsibilities that require maintenance.
The Feb. 9 session covered budgeting, insurance, and taxes; Feb. 16 highlighted the importance of managing credit; and Feb. 23 focused on investments and saving for retirement. Below is a brief description of the main objective and takeaway message from each session within the “Money Savvy Series.”
Budgeting, Insurance, & Taxes
Presenter: Associate Professor of Management Curtis Nicholls
Budgeting in advance is so important in order to achieve financial stability. Nicholls provided an array of different budgeting websites and encouraged those who decide to use the sites to accept the information with “a healthy level of skepticism.” All of the different forms of insurance were explored, and students were encouraged to “shop for the best rates and look for solid insurance companies.” Although there are a myriad of tax-related responsibilities, including employment taxes, federal income taxes, and state income taxes, there are planning strategies. These can include steps like maximizing your retirement plan, as well as using the online tax estimator at www.turbotax.com. The session also touched upon the idea of simple versus compound interest.
- Keep accurate records of your taxes.
- Note the premium, deductible, and copay of an insurance company.
- Keep an emergency fund that will sustain your needs for three to six months.
Presenter: Associate Professor of Management Cindy Guthrie
Credit scores are extremely important pieces of information that dictate a great amount of an individual’s financial capacities. It is important to build a good credit score, which can be accomplished in a variety of ways.
Guthrie advised students to apply for a secured credit card, on which small purchases should be made, and ultimately paid on time. 35 percent of credit scores rely upon simply paying bills on time, and another 30 percent relies on not maxing out credit cards, so it is very important that all purchases made on a credit card can eventually be paid. She suggested the “freeze” idea, where you immerse your credit card in a glass of water and freeze the glass, so that by the time the ice thaws, you will have had the time to think about a purchase before executing it.
Parents can also co-sign a loan, or students can receive cash secured loans from a bank. The example of purchasing a home was emphasized, a process through which credit will be extremely important. If this purchase is pursued with a spouse, both spouses’ credit scores are considered, so it is no surprise that a survey from the American Institute of Certified Public Accountants reports that 88 percent of millennial couples say financial decisions are a source of tension in their partnership.
“I’m not saying you shouldn’t marry someone with a low credit score,” Guthrie said, but she emphasized the importance of knowing the state of one another’s credit score in a relationship. The subject of purchasing a car closed the session. It is most ideal to purchase a car with cash, and it is essential that the entire budget is planned before committing to a car loan.
- New cars experience a loss in value as soon as they are purchased and driven off the lot—purchase a newer, used car.
- Set aside an envelope with money to pay for the items charged on store credit cards.
- Avoid the “debt snowball”—pay your bills before they accumulate.
Investments and Saving for the Future
Presenter: Associate Professor of Management Janice Traflet
The future always seems like something that can be figured out later, sometime in the future. However, the actions and decisions we make in the present dictate the future.
Traflet started the program by asking why it is true that “a dollar today is worth more than a dollar tomorrow.” Essentially, the earlier you begin to invest, the better. In terms of saving for retirement, it is best to save around 15 percent of income and invest it in Individual Retirement Accounts (IRAs) or 401(k)s.
There are various types of IRAs, some of which are not tax deductible, some of which are, and there are very few assets that cannot be put into your IRA. 401(k)s are plans that are sponsored through employers and allow employees to defer some of their compensation pre-tax to a retirement account, but there are more limited selections of investment assets that can be put into one’s 401(k).
With regard to stock investments, potential risks always exist, but if advice is sought out and cash reserves are in place for emergencies, stock investments have the potential to produce high-reward.
- Saving is not the same thing as investing—do not be fearful about beginning to invest.
- Sign up for 401(k) at work as soon as you are eligible.
- Always be prepared financially in case of emergencies.
Assistant Director of of Alumni Career Services Rachel Redmond expressed her appreciation for the program.
“The program is aimed at seniors, with the goal of addressing topics that typically come up when transitioning from college. This financial series is one of our most popular in the ‘Life After Bucknell’ program. Time and again, students say how beneficial this series is as it provides them with tools and helps them to make informed decisions about the way they hope to manage the money they will earn in the future. Having the ability to ask questions and get feedback from experts helps students to build their confidence as they continue working toward their many life goals,” Redmond said.
For more information regarding topics covered at the “Money Savvy Series,” further exploration of the opportunities that the CDC has to offer, or the contacts of faculty members eager to extend their guidance, visit http://www.bucknell.edu/CDCStudents.