College is a big step towards becoming an adult, and for many people this means increased financial independence.
Ryan Deany is the director and regional sales executive for Bank of America in the DFW area and leads a team of Merrill Edge financial advisors. He states learning about finances for college students is critical because it is the “first time that they will be on their own and have to start dealing with new bills such as cellphone, meals, rent and other items.”
With all of these new financial complexities, Deany advises “that it is important to sit down and have a tightly planned budget.”
To do this, students should “go through and prioritize what is important in terms of expenses and how students want to spend and utilize the assets that they have.” He also believes it is important for students to “sit down with a professional and discuss the key things they should be thinking through.”
Assistant professor of finance for the Cox School of Business, Dr. Mattia Landoni, has a little different perspective on the budgeting issue. He cautions that “budgeting has been invented to keep track of shared resources, such as in a government or a corporation” and that he has never kept a formal budget himself.
Dr. Landoni advises four simple principles for students in their budgeting: “1) Try to earn as much as possible 2) Try to spend as little as possible 3) Know ones checking account balance at all times and 4) Be aware of planned cash flows (+ and -) to avoid catastrophe.”
Dr. Landoni states that these four principles, if tracked, can be a simple way to keep one’s personal finances in balance.
Both Dr. Landoni and Deany advise that students be creative in their spending when balancing out the college experience with financial responsibility. Deany states that students should “look for free things or volunteer events that don’t need to cost anything but are still a great way to engage.”
Dr. Landoni comments that “college is for study, not for experience. Your main constraint should be time, not money. In fact, everything in life is a three-way tradeoff between time, money and experience” and advises that students fill up their time with a balance of both making and spending money.
Don Shelley, Professor of Practice in Finance at the SMU Cox School of Business, elaborates on the balance of personal finances for college students. He states that “College is a time in life where outflows are large and inflows are small,” mandating personal discipline and some form of a budget.
From his own experience, Shelley states that working part time can be a great experience for students. He says, “. I had to work because I needed the money, and it forced me to manage both the inflow and outflow of cash. It also made me appreciate the value of time and become a better multi-tasker.”
Students can find employment in a variety of areas across campus, depending on their skill set and interests. The Student Employment Office, provides work for over 1,400 students every year and can connect students to jobs on campus.
For more advanced topics, and specifics on the topics discussed above, Deany advises students to check out the Better Money Habits website. This site has information on topics such as what kind of account to open, savings planning and how to build credit.
Overall, it is important to ensure that students understand the basics of finance and will stop to think and educate themselves on the important issues.