By Amber Cobb —
Introducing part one of a semester-long column series on the topic: budgeting in college.
Financial well-being is one of the most limiting but important things we face as college students. Unfortunately, most of us are not on a level playing field.
Some of us grew up in a home where money wasn’t ever a big deal. Others grew up in homes where money was the only thing that was talked about; eating out was a luxury and you learned to not ask for things at a young age so to not spark an emotional response from your parents. Most of us probably grew up somewhere in the middle.
Regardless of what group you identified with, we all have something in common. We’re in college now and we have no clue what we’re doing with our money.
Not only are we trying to survive our day-to-day, but we’re also paying (way too much) for classes, books, and supplies. We’re planning for the future and maybe even preparing to pay more money for more school. We have a general idea of what we want our financial lives to look like in 10 years but we’re not sure if what we buy today is really affecting that dream or not.
In the last few years I’ve found myself saying, “Well, I wish someone would’ve told me that,” far more times than I’d prefer. Maybe they did tell me, but I’ve never really felt prepared. So how do we change that?
My hope this semester is to help you feel a little more prepared. More prepared to go out this weekend, more prepared to pay off your loans, and more prepared to buy a house sometime in the future. I’m no expert, but we’re going to hear from a few people who are and I’m confident they’re going to teach us some things that we didn’t know.
One of my biggest struggles in the financial world is that I don’t even know what I don’t know. It feels like there are so many things that I should know, but I don’t know that I should know them.
This week I talked with junior Stephanie Hemmer and sophomore Madison Spencer and asked them some questions about their financial awareness.
Spencer is pretty sure her loans are due 6 months after graduation, but she’s not quite sure. Neither of them have a credit card yet, or a budget and when asked what credit was, Hemmer responded: “Uhhh…a thing that I have to spend money in order to get? I don’t know, isn’t it like to show my reliability?”
Chances are, if asked the same questions, most of our answers would be similar to the ones above. Over the next several weeks I plan to cover things such as FAFSA, loans, credit and stocks. All things that you need to know, but maybe you don’t know you need to know.
Before we get into any of that, I’m going to explain some buzzwords below to set our foundation of financial savviness. Once we have that general knowledge, then we’ll get into the scary stuff.
Budget: A method for keeping track of how much money you have, where your money is going, and the amount of money you’ll need in the future.
Credit: the amount of trust you have earned based on your ability to repay borrowed money (credit cards, loans, etc.). The more credit you have, the more willing the banks/government will be to lend you money.
Credit Union: essentially a non-profit bank; designed to help you pay off your loans without gaining too much interest.
Grants: Money received from the government, school or other private companies that does not have to be paid back. Primarily based on need.
Interest rate: the percentage by which the money owed to a lender will increase over a set period of time.
Loans: Borrowed money typically received from the federal government that must be paid back. Usually gains interest.
Scholarships: Similar to grants, but primarily based on academics and abilities.
Taxes: money everyone is required to pay to the government and usually based on income.
Tuition: What it costs for you to go to class at UofL. Does not include additional fees, housing, meal plans, etc.
401(K): money that is taken directly from your paycheck and is not accessible until the age of retirement.
Graphic by Shayla Kerr / The Louisville Cardinal