It has struck me that as I graduate from college the greatest lesson I was not taught was in regards to managing money. I know that this might be seen as part of what your parents are suppose to teach you. While I think this may have been an acceptable assumption when Universities were reserved for the wealthy, in an age where educational attainment has increased, parents may not be familiar with the economic choices that their children will be faced with.
I come from a family with very little money and have always lived paycheck to paycheck. I now have a university degree and am facing the confusing world of financial investments, retirement funds, debt management (mostly student loans), and the ever elusive emergency savings. My parents have taught me what they could but as I try to select the appropriate loan repayment plan and look to begin my long term financial planing, I can't help but wish there were a course that I could have taken to prepare me for these types of decisions. Sure, economics and accounting are offered, but my knowledge of supply and demand and spreadsheets only give be a context in which to contemplate the consequences of my actions, and lack the practical information needed to confidently chose between financial plans.
I hope universities some day look to provide seminars on these life skills recognizing that college is about holistic growth. In the mean time my fellow graduates and I will have to avail ourselves of our research skills and hope our learning curve is steep enough to afford us the future we have envisioned these past years and now begin to build.
Personal Finances 101
By nmmorgan - Posted on June 26th, 2009
Figure out how much you make each paycheck. Budget an appropriate amount for food and bills (but don't pay all of your bills out of the first paycheck of the month; pay the minimum payment for your debts). Take everything into consideration, including eating out, gas/transportation money, money for gifts, and blow money if you tend to be an impulsive buyer. Put all your extra into a savings account until you have $1000 saved. Virtually spend every cent of your paycheck before it hits your account.
Once you have that $1000 emergency fund, put all the money you were using to save up towards paying your debt. Start with the smallest debt first, and keep paying only the minimum payments on the others. When you get one debt paid off, move to the next. Keep doing this til you have no more debt. Once you get rid of your debt, put all your extra into savings until you have an emergency savings of 2-3 months of your paycheck. Put that away somewhere where you don't have easy access to it.
After that point, you can enjoy your money a little more, because you won't have debt to worry about, and you will have enough saved for your expenses. But don't give up on your budget. The quickest way to get back into debt (credit card or otherwise) is to not have a budget.
~C
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I'd personally love a class that focused on personal finances such as loan repayments, 401K, retirement savings, credit rating, etc. Only so much can be taught as far as budgeting and staying out of debt, the rest is up to the individual. But a lot of graduating college students probably don't understand a lot about the subjects I mentioned, so I think something like that would be practical.
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