MONEY MANAGEMENT FOR

STUDENTS
Mari Livingston
Cindy Groth

1
 Table of Contents

Now that you’re out on your own enjoying college life, you will have many financial
decisions to make that could greatly impact the rest of your life. Every financial
decision you make should be planned out carefully. There are many benefits to
receiving a college education, but don’t forget to plan for the cost of that education
once you graduate.

Pages

Benefits of a College Education           3 

Rules for Financial and Debt Management        4 

Rule #1: Know What You Owe            5‐6 

Rule #2: Budget                7‐9 

Rule #3: Borrow Only What You Can Afford        10‐13 

Rule #4: Use Credit Wisely            14 

Rule #5: Maintain a Good Credit Rating        15‐17 

Identity Theft                18‐20 

Advantages/Disadvantages of Credit Cards        21‐22 

Warning Signs of Financial Trouble          23 

Want to be a Millionaire?             24 

Resources                   25 

2
 Benefits of a College
Education
 Higher average annual income  Healthier outlook on life.
– the Census Bureau reports
that a college degree nearly  Personal satisfaction – ability to
doubles annual earnings. find a job that makes you happy.

 Increased number of job  Acquire a wide range of knowledge

opportunities – a college
degree is a necessity in today’s
business world. 
 Ability to receive more
promotions and raises – 
advancement will be easier
because many promotions
require a college degree.
in many subjects.
Develop communication and
reasoning skills.
Networking and meeting new
people – acquiring people skills is
extremely important to your future
in the workforce.

 Increased value to a company  Having fun – you will make life

– throughout college you’ll be -long friends.
setting goals and developing
organizational skills that will
be extremely beneficial to a
future employer.

 More control over your future

– the leadership and time
management skills necessary
throughout college will only
enhance your potential for
advancement in the workforce.

3
5 Rules for Financial and
Debt Management

4
 Rule #1: Know What You Owe

The first step to financial

management is to get a clear
picture of what you owe. This Step 1: Know What You Are Going to Owe
sounds easy, but it can
sometimes be emotionally
difficult. Don’t worry too
much; the long-range outlook Tuition, Fees, and $8,520
of your education is Laptop
reassuring.
Room and Board $7,540

Books and $1,200

As a student there are two Supplies
steps to this rule. First, you
need to know how much Personal $2,300
school is going to cost.
Second, you need to know
what all of your current Transportation $640
personal debts are. Let’s first
take a look at what you are Loan Fees $120
going to owe for school. Here
is a nine month school budget
for a Minnesota resident. Credit Card $0
(You can increase the budget Balance
by three percent every year for
budgeting.) Car Loan/ $0
Insurance
Total $18,170
The Financial Aid website has
nine month budgets for non
-Minnesota residents and Wis-
consin Residents.
www.winona.edu/financialaid

5
 What Are Your Current
Personal Debts?
Step 2: What Do You Currently Owe?

Resources Student Loan

National Student Loan Data
System (NSLDS): Subsidized Direct Loan $_______________
www.nslds.ed.gov Unsubsidized Direct Loan $_______________
Perkins Loan $_______________
Great Lakes Higher
Educational Loan Services, MN SELF Loan $_______________
Inc.: www.glhec.org Other Student Loan $_______________
Total all Student Loan(s) $_______________
Sallie Mae
http://salliemae.com
Other Loans
Firstmark Services
(MN SELF Loan)
www.firstmarkservices.com/ Credit Card Balance(s) $_______________
index.aspx Car Loan $_______________
Other $_______________
Total all Other Loans $_______________

Total of Student and Other Loans $_______________

6
 Rule #2: Budget
Live Within Your Means
Let’s face it, creating a budget sounds like an arduous task that you want to place on the
bottom of your to-do list. Instead, try to think of it as creating a personal spending plan. It
provides you a way to understand where your money goes, and lets you know if you need
to make any changes to your spending.

Example: Fall Semester Budget

As a student, you can Income
Expenses
separate this rule into two Tuition, Fees, Laptop $4,260 Savings from summer job $2,680
steps. The first step is Room and Board $3,770 Work Study $1,100
creating a budget to figure Books and Supplies $600 Mom and Dad $1,000
Scholarships $1,500
out how you are going to Personal $1,150
Grants $1,130
pay for school. The second Transportation $320 Student Loans $2,750
Loan Fees $60
step is creating another Total $10,160
Credit Card Balance $0
budget for all of your Car Loan/Insurance $0
personal expenses. Total $10,160

First take a look back at

what you are going to owe
Your Fall Semester Budget
for each semester. Then
come up with a plan on
Expenses Income
how you are going to pay Savings from summer job $_______
Tuition, Fees, Laptop $4,260
for it. Room and Board $3,770 Graduation money $_______
Books and Supplies $600 Work Study $_______
Mom and Dad $_______
Personal $1,150
Scholarships $_______
Transportation $320 Grants $_______
Loan Fees $60 Student Loans $_______
Credit Card Balance $0 Other $_______
Car Loan/Insurance $0
Total $10,160 Total $________

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 Personal Spending Plan

Net Monthly Income (After Taxes) Personal Expenses

Job #1 $ Clothing $
Job #2 $ Personal Care $
Other $ Household Items $
Total Income $ Other $

Expenses
Housing and Utilities Monthly Repayment on Debt
Rent or Mortgage $ Car Loan $
Maintenance/Repairs $ Student Loan(s) $
Utilities (energy, cable) $ Credit Card(s) $

Furnishings $ Other $

Transportation Entertainment
Gasoline $ Restaurants $
Maintenance/Repairs $
Movies/Concerts/Theater $
Parking/Tolls $
Other $
Public Transportation $
Savings
Food Emergency Fund $
Groceries $ Goals (school, car) $
Meal Plan $

Miscellaneous
Insurance Other $
Renter’s/ Homeowner’s $
Other $
Auto $

Medical/ Dental $ Total Expenses $

Life/ Disability $
Total Income $
Health Costs Minus Total Expenses $
Medical (out of pocket) $ Surplus or Shortfall $

8
 Tips on Saving Money

 Banded Tuition Rate. You are charged the same tuition rate whether you take 12
or 18 credits. The more credits you take the more value you get for your money.
 If you have a meal plan, use it. Stop eating out. Use your meal plan or learn
how to cook.
 Share living expenses with roommates. Whether you’ll be living on-campus or
off-campus, get a roommate to share expenses.
 Use e-mail rather than a cell phone. Even if you are not ready to part with your
cell phone, you can look into a cheaper plan.
 Do you really need your car? Save money on gas: walk, ride your bike, and
share rides with your friends.
 Don’t buy what you don’t need. It is easy to spend money on fun or convenient
purchases. You’ll be glad to have the money available when you really need it.
 Don’t get a credit card. If you must have one, only use it for emergencies.
 Buy used books.
 Find free fun. Take advantage of on-campus entertainment such as sporting
events, plays, or concerts.
 Instead of going to a movie, rent one! Better yet, the public library lets you
borrow them for free.
 Stay on top of your finances. Bounced checks and late fees can quickly drain
your money away.
 Apply for scholarships. www.Supercollege.com, www.finaid.org, or
www.scholarships.com

Keep in mind that college isn’t the time to splurge. Staying out of debt now will mean
more freedom later.

9
 Rule #3: Borrow Only
What You Can Afford
How do you know what you can Example Calculation of Debt-to-Income Ratio
afford? There is an easy calculation
Income
that can answer what you can afford:
Gross Salary $ 360
your debt-to-income ratio. Investment Income $0
Other $0
Total Income $360
Divide your monthly minimum debt
payments, by your monthly gross Monthly Payment on Debt
Total of ALL Student Loans $0
income.
Car Loan $150
Credit Card $50
Some debts don’t have a fixed Other Installment Loans $0
payment, like credit cards. You can Total Monthly Debt $200
estimate the payment by taking 4% of
the total owed. Debt-to-Income Ratio $200/$360 = 55%

Total Monthly Debt divided by Total Income

What is an acceptable ratio?

General guideline for non-housing

debt-to-income ratios:

10% or Less Excellent

11% to 20% Acceptable
21% to 35% Overextended
36% or More Danger!

10
 How Much is Too Much?

Jane is a 28 year old insurance agent. Her monthly

gross salary: $3,500 ($42,000 annually). She pays
$345 a month for undergraduate student loans
($30,000 borrowed), $380 per month on a car loan
($19,000 car), and $120 per month on credit cards.
($3000 debt).

Total monthly payments on debt: $845

845 divided by 3,500
Debt-to-Income ratio: 24.1% (Overextended)

How Much Should I Borrow?

A Liberal Arts Major will make an

average starting salary of $29,060 per
year. They should not borrow more than
$16,835 for school.

An Engineering Major will have an

average starting salary of $53,659 per Your debt-to-income
year. They should not borrow more than ratio is usually a
principal component in
$31,085 for school. determining whether a
loan is approved or
denied.
Note: These calculations are based on the
financial aid industry recommendation that
student loan debt not exceed 8% of your gross
earnings.

http://www.mappingyourfuture.org/paying/debtwizard/

11
 What Will You Earn?

Median Salaries For Various Occupations

Source: 2009 Occupational Employment Statistics from the U.S. Dept. of Labor Bureau of Labor Statistics

Executive, Administrative, Managerial Technicians

Accountant and Auditor………… $67,430 Dental Hygienist…………… $67,860
Advertising Manager……………. $97,670 Licensed Practical Nurse…... $40,900
Budget Analyst………………….. $69,240 Pilot………………………… $117,060
Building Inspector………………. $53,550 Air Traffic Controller………. $106,990
Hotel Manager…………………... $53,500 Computer Programmer……... $74,690
Loan Counselor…………………. $40,930 Drafter……………………… $48,210
Marketing Manager……………... $120,070 Paralegal…………………… $50,080
Property/Real Estate Manager...... $58,660
Restaurant Manager…………….. $31,460 Marketing and Sales
Retail Store Manager…………… $39,130 Insurance Agent……………. $61,330
Insurance Underwriter………….. $63,330 Manufacturing Sales Rep….. $61,400
Retail Sales………………… $24,630
Specialty Occupations Travel Agent……………….. $32,450
Engineer………………………… $90,600
Architect ……………………….. $78,880 Administrative Support
Surveyor………………………… $57,420 Bank Teller…………………. $24,780
Lawyer………………………….. $129,020 Office Clerk………………... $27,700
Psychologist……………………. $84,220 Administrative Asst………... $31,060
Sociologist……………………… $76,190
Human Services Worker………... $29,880 Starting Salary Offers (National Averages)
Social Worker…………………… $50,470 Source: National Association of Colleges and Employers
Athletic Trainer…………………. $44,020
Adult Literacy Teacher…………. $50,390 Salary Survey, Summer 2007
Elementary School Teacher…….. $53,150 Major Current Average
High School Teacher…………… $55,150 Accounting ……………….. $46,718
Counselor………………………. $44,400 Business Administration….. $43,701
Librarian ……………………….. $55,670 Civil Engineering………….. $48,509
Chiropractor……………………. $80,390 Computer Science…………. $53,396
Dentist………………………….. $156,850 Economics………...……….. $48,483
Physician……………………….. $173,860 English……………………. $32,553
Veterinarian…………………….. $90,110 Finance…………………….. $47,648
Pharmacist……………………… $106,630 History…………………….. $33,768
Physical Therapist……………… $76,220 MIS………………………… $47,648
Registered Nurse……………….. $66,530 Marketing………………….. $40,161
Optometrist……………………... $106,960 Mechanical Engineering…… $54,128
Political Science…………… $34,590
Service Occupations Psychology………………… $31,631
Police Officer…………………… $55,180 Sociology………………….. $32,033
Flight Attendant………………… $43,350
Fire Fighter……………………… $47,270

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 How Much Can You Afford
to Borrow?
What you can afford to borrow is based on your annual income that you will earn after
graduation, which determines the monthly payment you can afford. Generally, your
monthly student loan payment should be no more than 8% of your monthly income.
Your Expected Annual Income After You Can Afford to Borrow Your Monthly Payment*
Graduation
$15,000 $8,650 $100
$17,500 $10,150 $117
$20,000 $11,500 $133
$22,500 $13,000 $150
$25,000 $14,500 $167
$27,500 $15,850 $183
$30,000 $17,350 $200
$32,500 $18,850 $217
$35,000 $20,200 $233
$37,500 $21,650 $250
$40,000 $23,200 $267
$42,500 $24,550 $283
$45,000 $26,000 $300
$50,000 $28,900 $333
$55,000 $31,850 $367
$60,000 $34,800 $400
$65,000 $37,600 $433
$70,000 $40,550 $467
$75,000 $43,400 $500
$80,000 $46,300 $533
$90,000 $52,100 $600
$100,000 $57,950 $667
$110,000 $63,650 $733
$120,000 $69,500 $800

*The figures are approximate and are based on a 6.8% Federal Direct Loan interest rate and a 10-year repayment term. Vari-
able rate Federal Stafford Loans are capped at 8.25%

13
 Rule #4: Use Credit Wisely

Good Debt

Good debt leaves you with an asset that is worth more than the loan. Good debt helps
finance long-term investment, like education, which only increase in value over time.

Bad Debt

Bad debt helps your financial short-term gratifications, like clothes or a new video
game. Bad debt accumulates from buying things that you cannot afford.

Loan Repayment Examples

Bill wants to buy a car before he starts school at WSU. He finds a car, and he will need
to borrow $5,000 at an 8% interest rate. Bill is given two different repayment options.

Loan Interest Rate Monthly # of Monthly Total

Amount Payment Payments Amount
Repaid
$5,000 8% $122 48 (4years) $5,859
$5,000 8% $157 36 (3 years) $5,641

Generally, the shorter the repayment period, the higher your monthly payment will be,
but the more you will save in total costs.

Bill has some choices to make about his car loan. For example, Bill needs to figure out
whether he can afford to pay the higher monthly amount in order to save money on the
total repayment costs. However, even before deciding on which repayment term is
better for him, Bill needs to decide whether he can afford any car payment in addition to
the other expenses he will have as a college student.

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 Rule #5: Maintain a Good
Credit Rating
What is a Credit Report?

Credit bureaus compile information about consumers for financial institutions,

landlords, and potential employers. A credit report describes your financial history.
There are three national credit bureaus: Experian, TransUnion , and Equifax. Each
bureau gets information from banks, credit card companies, retailers, student loan
providers, and any other lender who has extended credit to you. Your report contains
account information, balances, and any late or missed payments. Each bureau works
independently, so each report might look different, but the information should be the
same. To get a free copy of your credit report, visit www.annualcreditreport.com.

What Makes Up Your Credit Score?

New Credit 10%

Types of Credit Used 10%

Payment History 35% 

Length of Credit History 15%

Amounts Owed 30%

15
 Credit Scores Range From
300 (worst) to 850 (best)
Payment History (35% of your score)
Making payments on time is the single
most important thing you can do to
build and maintain a high credit score.
It takes into account many different
types of payments, including credit
cards, car loans, installment loans and
mortgages. It also details any missed
or late payments, such as the amount,
how long ago it occurred, and how
late it was.
Amounts Owed (30% of your score)
negative in your file. If you have a
short credit history, companies do not
yet know if you will be a good credit
risk.
New Credit (10% of your score)
If you open a lot of new accounts in a short
period of time, you may lead companies to
assume that you are overextended, or that
you’ve fallen on hard times. Every new
account you open automatically lowers the
average age of your accounts overall,
which isn’t good for your score.

This looks at the total of all amounts Types of Credit Used (10% of your
you owe for all accounts, what type of score)
payment it is, the number of accounts
that have balances, and how much of Having a mix of different types of credit
your total credit you have available to accounts, such as credit cards, installment
use. When you get close to your loans, and mortgage, shows that you are
credit limit, companies may think able to handle multiple lines of credit.
you’ll have trouble making payments.
If you must keep a balance on your
credit cards, try to keep it low - no
more than 30%-35% of your available
credit limit.

Length of Credit History (15% of your

score)

The longer your credit history, the

higher your credit score will be, as
long as you don’t have anything

16
 Why is it Important to Have
a Good (High) Credit Score?
It is important to have a high credit score, so you can receive a lower interest rate on
loans. Look at the difference between two customers who are borrowing the same
amounts for the same products, but have very different credit scores.

Customer 1 LOW SCORE - 550 Customer 2 HIGH SCORE - 750

$10,000 car loan for 5 years $10,000 car loan for 5 years

13.5% interest rate 7.15% interest

$13,806.00 total paid for car $11,923.20 total paid for car

$200,000 house loan for 30 years $200,000 house loan for 30 years

12.0% interest 5.65% interest

$704,602.80 paid for house $415,609.20 paid for house

Ways to Improve Your Credit Score

 Obtain a credit report so you know your score and can check it for inaccuracies.

 Pay your bills on time – set up automatic payments when possible – a late payment can really
hurt your score.

 Do not max out your credit cards – try to pay off your balance – charge only what you can
afford to pay.

 Establish checking and savings accounts.

 Keep old accounts open if they are in good standing – having a good credit history is important.

 Negotiate with creditors if you are having problems – reduce your interest rate, reduce your
minimum monthly payment, have late fees waived.

17
 Identity Theft

What is Identity Theft?

Identity theft is the use of your personal information (name, social security number,
credit card number, etc.) without your permission. The FTC has estimated that as many
as 9 million Americans have their identity stolen each year.

How is my Identity Stolen?

There are various methods for stealing a person’s identity. These can include:
-Theft (purses, wallets, mail, personnel records, etc.)
-Dumpster Diving – (rummaging through garbage to find personal information on
bills, etc.)
-Phone Calls (use false pretenses to collect your personal information)
-Emails (asking for personal information so they can access your bank accounts)
-Skimming (using a device to make a copy of your credit/debit card numbers)
-Changing your address – (diverting your mail to another address to get your
personal information)

What can happen if my identity is stolen?

Identity thieves can use your personal information in a variety of ways.

Credit Cards: A credit card account can be opened using your personal information.
They will make charges on your card and then fail to pay the bill. This will result in
delinquent accounts on your credit report. If they change your billing address, it can
take some time before you realize what is happening.

Utilities: Your personal information may be used to obtain utility services such as gas,
electric, telephone, cable TV, etc.

Bank Accounts: Can be opened using your personal information which can result in
bad checks written in your name. Your ATM or debit card could be reproduced and
money could be withdrawn to drain your account. A loan could even be taken out using
your personal information.

Government Documents: A driver’s license could be issued in your name using their
picture. Your social security number could also be used to obtain government benefits
or a tax return could be filed using your personal information.

18
 Identity Theft Continued

Other fraud: This could include getting a job using your personal information or
obtaining medical services. Your information could be used if an identity thief is
arrested – you would be arrested when they don’t appear for their court date. The
possibilities are really limitless.

How Can I Find Out if My Identity Has Been Stolen?

Unfortunately, most people find out their identity was stolen after the damage has been
done. You should always check your bank statements on a regular basis and make a
habit of obtaining a credit report as often as monthly. This could prevent many
headaches down the road.

What Should I Do If My Identity Is Stolen?

Notify your creditors as soon as you know this has happened. You should also file a
police report and have your picture and finger prints taken by the local police
department. You can also put a “black flag” for identity theft on your credit report. This
will alert creditors to follow certain procedures before they open new accounts in your
name or make changes to existing accounts. You should close all accounts that have
been tampered with.

What Can I Do To Prevent Identity Theft?

Educate yourself on the ways your identity can be stolen, and take measures to make
this as impossible for an identity thief as you can. Having an overall awareness of this
and informing family and friends can go a long way in aiding prevention.

19
 True Stories

Male, looking for job for four years – no

one would hire him. He applied for PEN
hundreds of jobs and if he ever did get a HAP
job, he was fired within days. He ended LD U!
O U YO
up filing for bankruptcy, lost his C TO
apartment and became homeless. He IT
blamed himself for not being hired. One
day he found out the truth – a man had
given his identity to authorities when he
was arrested for shoplifting and other
crimes and this victim’s profile then
found its way into a range of computer
databases used in background checks by
employers. Five years before his wallet
had been stolen with $4, his driver’s
license, social security card, and military
ID.

Victim had been dealing with identity

theft for over 10 years – her identity
was stolen when she was ten years
old. By the time she was 16, she had
a car, credit cards and a house. She
started educating herself on identity
theft and found out that over half of
thefts in this country are tied to theft
rings.

20
 Credit Cards

There are definitely advantages and disadvantages to having a credit card. College students are
targeted because of their potential for future earnings. A college student does not need a credit history
or any income to receive one. The credit card companies are hoping that the student will keep their
card once they have graduated from college and are earning a good salary.

If you are going to get a credit card, you will want to shop around for the best deal. You should be
watching for annual fees, annual percentage rate, grace period, balance calculation method and other
fees. You should also look at the benefits associated with the card (frequent flyer miles, etc.)

ADVANTAGES:
Getting a credit card allows you to
establish credit. You can also use it
for medical or family-related
emergencies, making travel
arrangements and reservations,
payment conveniences such as
shopping by telephone and the
Internet and paying for purchases
over time. They are convenient as
there is no need to carry cash. Many
also have benefits such as frequent
flyer miles. Having a credit card will
also help teach financial
responsibility.
DISADVANTAGES:
Financial inexperience can be a
disadvantage. For most college students,
this is their first credit card and their first
experience with obtaining debt. Because
of their convenience, it can be very easy
to misuse a credit card. A student can
accumulate excessive debt that they are
unable to pay off each month. It’s easier
to buy on impulse and forget you are
spending money that you will have to
earn in the future to pay off the bill. The
interest rates will typically be quite high
and can really add on to the amount you
owe if you don’t pay off your bill
monthly.

21
 Credit Cards

Credit card balance $2500 Credit Card Balance $2500

Interest Rate 18% Interest Rate 18%

Monthly Payment $50.00 Monthly Payment $100

It will take 94 months (7 years, 8 It will take 32 months (2 years, 7

months) to pay off your debt and months) to pay off your balance
you will pay $2,155.59 interest. and you will pay $656.98 interest.

If you made only the minimum

payment each month, it would take
415 months (34 years, 6 months) to
pay off and you would pay 6,430.93
in interest.

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22
 Warning Signs of Financial
Trouble
 You can only pay the minimum amount due on your credit card – as you saw
previously, the interest rate can be very high. By paying only the minimum
amount due, you could be paying for a purchase for years.

 You have to borrow to make payments on existing loans or get cash from one
credit card to pay off another credit card – this is not a good sign!

 You have to work extra to cover basic expenses.

 You have trouble sleeping because you are worried about your debt.

 You don’t dare open your mail because the bills are too overwhelming.

 You max out your credit card limit.

 Creditors calling – if you are getting phone calls regularly, you are headed for
trouble.

 You don’t even know what your total debt is.

Be aware of financial warning signs ahead of time

to prevent debt problems!

23
 DON’T PANIC!

 Make a list of everything you owe.

 Check the interest rates.

 List the debts in order from the

highest rate to the lowest rate.

 Call your creditors and talk about

your financial situation.

 Ask them to reduce your interest

rate.

 Let them know you are working

on paying off your debt.

 Pay off the debt with the highest

interest rate

TAKE RESPONSIBILITY FOR YOUR

DEBT NOW!

You many want to consider contacting a Debt

Consolidation company.

24
 Want to be a Millionaire?

 Age 26
 Save $200/month
 In 4 years you will have $10,000
 Expected rate of return = 2%
USE THIS CALCULATOR TO SET YOUR SAVINGS GOALS:

http://www.youngmoney.com/calculators/savings_calculators/savings_calculator

HERE’S HOW!
 Invest the $10,000
 Add $400/month (savings, retirement accounts
and investments)
 You could reach $1,000,000 by age 65!
USE THIS CALCULATOR TO SET YOUR GOAL OF BECOMING A
MILLIONAIRE:
http://www.youngmoney.com/calculators/savings_calculators/millionaire_calculator

25
 Resources

RESOURCES FOR DEBT MANAGEMENT STRATEGIES

www.credithealthy.com
free online credit educational services – geared specifically for college
students to proactively keep you credit healthy.

www.mappingyourfuture.org
Financial fitness tools

http://www.financialplan.project.mnscu.edu/
Start working on your personal finance plan

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