Monday, March 23, 2009
After a careless week of debauchery, the real world has slammed you in the face. You had to wake up before 1 p.m., classes are in full swing, and you’re scheduled for an eight-hour shift tonight. All this, and your hangover from the last night in paradise is still lingering. Then, as you try to buy more Ibuprofen, you’re forced to focus your bleary eyes long enough to see “insufficient funds” on the register. Where did all your money go?
Those memories you don’t remember are conveniently listed on your bank statement. $50 at La Vela, $60 at Schooners, $100 at Boatyard, and the list goes on. Getting out of the hole will take some successful money management. Here are some tips for getting out of the spring-break sinkhole and making sure you don’t fall in again:
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Break your income into monthly and weekly increments and then forecast your income for at least three months.
1. Know how much money you have and how much you make. Break your income into monthly and weekly increments and then forecast your income for at least three months.
2. Know where your money is going. Rent and utilities typically don’t change; the hard part is determining where the rest of your money goes. Take a week and keep track of all your expenses: food, gas, movies, bars, etc. Group these expenses into categories (housing, car, food, luxuries).
3. Combine your info and calculate your income and expenses for at least the next three months. Are you in the red or black?
4. Now comes the hard part: cutting out the waste. Turn off the lights, unplug appliances, don’t use the TV for background noise and soak up free air conditioning in Anschutz while keeping your AC off. Before you go shopping, make a list and find coupons. When you’re shopping, buy the off-brand and look at the unit price (at Wal-mart it’s the orange price). Change your way of thinking about dollars and cents. Instead of “It’s only $1,” think “That’s one more McChicken sandwich.” Throw the McChicken sandwiches that you and your stomach don’t need into a savings account for next year’s spring break.
Now that you’ve got the basics of budgeting down, here are some advanced tips for becoming financially savvy.
1. Keep three months’ worth of rent and utilities in a savings or money market account. These types of accounts usually require a minimum balance and have restrictions on how many withdrawals you can make each month. Because of these restrictions, the banks pay a higher interest rate. Rent and utilities are once-a-month bills, so you won’t have a problem with too many withdrawals. Staying three months ahead should cover the minimum balance and give you a sound footing in case you lose your job.
2. Get a credit card with rewards. This is going to require discipline on your part, because it will only pay off if you don’t carry a balance. Use the rewards card on all your basic necessities, because, unlike a debit card, when you swipe a rewards card you get points which can be redeemed for cash, travel, or retail rewards. The trick is to treat this credit card as if it were debit. Do not spend money you don’t have, because the second you carry a balance you will more than pay for those once-free rewards.
With good money management, spring break 2010 will be twice the party. Good luck!
— Davidson is a Tonganoxie senior in economics.
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