College Connect: Financial Expert Explains the Basics for College Students

Posted By David Wilhite

By Denver Ellison

Many of us may think we have our personal finances under control. This is especially true if we have been living on our own for some time. However, talking to an expert can help us to better understand the various aspects of personal finance and how money is important in our lives. Swarn Chatterjee, an associate professor in financial planning, housing and consumer economics at the University of Georgia, spoke with College Connect about basic financial topics college students should understand.

Q: What are some of the basic financial concepts that you feel all college students should know?

A: Some basic planning techniques like how to budget and how to keep track of your income and expenses. That goes a long way. Basically, have the knowledge of some basic personal finance skills related to budgeting, some knowledge of savings and the “how to” of it all. You can read books on that or you can prepare in advance while taking some courses while at school.

Q: What are some tips for budgeting?

A: It’s recommended that we save a percentage of our income. We all have good intentions. But if we wait until the end of the month to save, that money is gone. So first, pay yourself. Save first and then spend. If I had to give one takeaway, one tip, that would be it. As soon as you get that salary, put away the money that you want to save and then spend on the rest of the stuff.

Q: A lot of us college students find various ways to mismanage and blow through our money. What do you see as the main ways college students completely throw away money?

A: Well, I think a lot of it has to do with misprioritization of your needs and wants. A lot of times what happens is we are very optimistic about how much that money we have can last. This is why planning and budgeting keeps us real on these issues. Otherwise, we tend to overestimate that it is a lot of money. People spend a lot after the first few days of receiving the money and then struggle towards the end of the semester or end of the month.

Q: Why do you think this is the case for many of us college students?

A: So, there are a few things going on. On one hand, a lot of us believe that the money is going to last. We tend to rationalize that splurging. But, we do that because our mind is trying to rationalize a decision that our hearts know is wrong. The other thing is we believe that. In the absence of budgeting, many of us may not have a clue. It’s a preference for spending now over later, overestimating how much our money is going to last and not tracking our expenses.

Q: When you talk to students or recent graduates, how do you explain the importance of the budgeting process?

A: In the classes we offer, we get students to prepare their own budget and manage it for three months. Outside of that, I tell students to make use of technology. There are lots of apps out there. The thing is, if we track our money, we get more information than not tracking.

Q: A lot of us we know that it is important to save for the future. However, what would you say are the main reasons for why we should start saving when we are young?

A: The reason why we say that is because of the power of compounding. The earlier you save, the more compounding rates of returns you get every year. So you save, you earn some return or interest on that and then, you generate more savings off of that interest. If you start saving late, you have to save more every year. But, if you start early, even saving a little bit will pay off over time.

Q: Are there any other major points that you can think of?

A: I recommend students to learn about all of this. Money is not a very pleasant topic of discussion. Our parents encourage us to study and do well in school but barely talk about money. So, being a college student, you have a nice buffer to read up and learn this stuff. It’s much easier to do this at school than in the real world.

Denver Ellison is a journalism major at the University of Georgia’s Grady College of Journalism and Mass Communication

 

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