Money Mangement Tools for Students
Doug Savage, TG Senior Regional Account Executive
Technology keeps getting better and easier to use. The editing gear available for today’s high school film students is of a higher quality than the old-school equipment pros used not too long ago. New “smart” thermostats are saving energy and keeping homeowners cool. Camping out? You might consider taking along a lightweight solar panel to recharge your batteries.
What’s true across in these contexts applies as well in managing finances. For adults, money management sites like Mint.com, software like Turbotax, and any number of personal finance apps have greatly simplified keeping track of money: how much comes in and when and where the funds are spent. In many cases, these are add-on services rather than products consumers must purchase. According to a 2012 U.S. News and World Report article, about one in four financial institutions make online tools available to customers. In short, consumers who used to dread the whole budgeting process are a few clicks away from colorful pie charts mapping spending categories, projections for the next month’s bills, and targeted savings accounts for fun things like vacations.
This boom in personal finance technology isn’t geared only at adults, either. There are many resources available for high school and college students, and these resources can help with learning about money management, clarifying the variables in key financial decisions, and better understanding the downstream consequences of upstream choices. Many of them, such as Budgetpulse, are free. Different sites offer different tools, and students may benefit from money management tools that help them make informed choices with regard to topics such as spending plans (budgeting), responsible use of consumer credit, understanding student loan repayment, and even how choice of academic major may affect future income.
Budget Calculators
The Department of Education’s website, like many student-oriented websites, offers a budget calculator. This tool allows the student to enter expenses by category and see how choices in one area affect resources in another. Watching the outcomes change as different values are entered may get students’ attention in a way that parents’ explanations sometimes fail to. Other sites, including www.bankrate.com, also offer budget calculators that students may find helpful.
Credit Card Calculators
You’ve no doubt seen the seductive approach of credit card offers geared to students who are all too often unable to understand the terms to which they’re agreeing. No interest for six months? Woo-hoo! Of course the interest may then skyrocket, meaning the effective rate on purchases made during the “free” period turns out to be quite high. Credit card calculators, like the ones available on Bankrate, may help students see through the monetary sleight-of-hand and make better decisions. Educational tools, such as Skills Builder on TG’s Adventures In Education (AIE™), add a fun game element to the student’s experience in learning the basics of how rolling over interest can lead to very expensive consumer goods.
Student Loan Calculators
By definition, student loans are a particularly important area of student financial decision making. Borrowing to pay for higher education is often a very good investment, leading students to high-earning careers and low unemployment. That’s a strong return on investment! Overborrowing, though, can lead to years of being burdened with debt, and a sense of bewilderment. “How did I get into this mess?” borrowers may wonder.
Loan payment calculators, such as this one from FinAid!, help to reduce that confusion by giving students a better chance to understand the consequences of borrowing decisions. Similarly this calculator from AIE drills into the details of daily interest, so that students can see if it’s to their benefit to make payments early, and can see how much of a payment is applied to interest and how much to principal.
A relatively new tool, based on TG’s research, even helps students to see how their choice of major and career affects the loan repayment affordability. The tool, Major Choices, is an online debt-to-income calculator in which students can get an estimate of potential median debt-to-income ratios for certain majors at many public college and proprietary institutions within Texas. The bottom line? More informed choices.
"When students choose their college major, it usually corresponds to a career they have their heart set on," explained Jeff Webster, Assistant Vice President of Research and Analytical Services at TG. "We want to spotlight the importance of fully considering the way that federal student loans may take a significant bite out of potential future earnings, and educate students on how to balance that occupational choice with wise borrowing behavior."
Whether it’s making a spending plan and adjusting a budget by categories, responsibly managing credit cards and steering away from bait-and-switch interest rates, or being smart about student loan debt and repayment (including thinking about one’s academic major and future career), students have a lot of financial choices to make. As technology continues to improve, tools like these will assist your students in finding their way to success.
Doug Savage is a senior regional account executive with TG serving schools in TASFAA. You can reach Doug at (800) 252-9743, ext. 6711, or by email at doug.savage@tgslc.org. Additional information about TG can be found online at www.TG.org.
