By Gracie Englund
When third-year management student Jeffrey Kempski started classes at the University of Georgia, the number of students who did not manage their money shocked him, he said.
“It blew me away that not a lot of people split their income at this age because I thought that was something everyone was taught,” said Kempski.
Kempski’s parents taught him to save a portion of his income to build wealth over time, he said. Jeffrey allocates 40% of his income into his savings, using the remaining 60% as discretionary.
Kempski said budgeting in college allows him the flexibility to splurge on vacations and dinners with the reassurance of knowing he saved enough money. Through balancing a part-time job and lending money to friends, Jeffrey understands firsthand how financial responsibility – or irresponsibility – impacts college students, he said.
Chris Miller, Wintergreen Corporation’s chief financial officer, advised students to practice discipline instead of undertaking large sums of debt.
According to U.S. News & World Report, public college graduates borrow $26,320 for a bachelor’s degree, on average.
“I would encourage people to look at all of their different options versus putting themselves in a position where they may end up spending the first three to five years or longer of their career paying off a loan,” Miller said.
As a financial executive at large e-commerce retailer, Miller encouraged students to consider their money the same as a company would, and suggested they become familiar with the concept of return on investment,” or ROI. As Investopedia defines it, ROI is a calculation of how much money you will get back based on how your money is used, or invested.
Miller recommended students use the approach when taking on loans. “I would encourage people to just look at all the different options and do an ROI analysis on the loan,” he said, adding students should ask themselves, “Do you think your income-earning potential justifies that loan?”
Creating and maintaining a college budget seems daunting, but Miller said by setting and reaching goals, the process can be more exciting.
“Most people have something they want to buy somewhere, not too far down the road. If you start looking at it that way, then it becomes a little bit more interesting. You take control of the situation versus letting the money control you,” he said.
Budgeting in college provides students the opportunity to practice managing money without the high-stakes pressures of adulthood. Miller reiterated the importance of refining financial skills at a young age because, like any other skill, it takes training and discipline.
“Money works for you or it works against you, so the sooner you get it working for you the easier it is,” Miller said.
Kempski said he recognized that budgeting in college does not always mimic the real world, understanding that without his financial support from his parents and scholarships, his college lifestyle would look drastically different.
“I think it’ll be a little harder once I’m taking on the rest of (the) expenses like groceries, gas, taxes, rent, and all of those items,” he said.
Gracie Englund is a journalism student at the University of Georgia.