I work with college students every day. I encounter lots of different issues in their lives. Personal finance is near the top when it comes to their biggest struggles. Some have no idea how to handle their money. Others don't have any money (okay, that's most of them).
What should a good financial foundation for college students look like? Dave Ramsey is famous for his "Seven Baby Steps" that pave a solid financial path for the average North American. I'm a Ramsey fan and certified Ramsey Solutions Financial Coach. But his baby steps aren't perfect for everyone, particularly college students. Here are seven baby steps I recommend college students take to move them toward financial health.
What do you think? What's missing?
If you're a college student and want to talk more about your financial situation, reach out. I'm happy to help.
I feel sorry for budgets. They get such a bad rap. I would guess if "Budget" had a public approval rating, it would be rather low.
Fortunately, it doesn't have to be that way, and I'd like to help change the negative perception. It sounds like this: Isn't budgeting a straight jacket? Doesn't it take away your fun?
Not at all. Do you know what takes away fun? Uncontrolled spending and massive amounts of debt. And, as it happens, that brings more than just money problems.
There are two options when it comes to personal finance. You either 1) let anything and everything outside of you tell you what to do with your money or 2) you to tell your money what to do.
The first is enslaving. The second is liberating. And, in a nutshell, budgeting is telling your money what to do.
Of course, budgeting takes discipline. And "discipline" can be a dirty word. But when is it a dirty word in any other area of life? If you are undisciplined at work, you get fired. If you are undisciplined with your physical health, you get sick. If you are undisciplined in relationships, you end up bitter and alone.
But discipline leads to freedom. Why? Budgeting is actually liberating because in telling your money what to do, you free yourself up to be able to spend money without going into debt.
You paid your mortgage. You have money for groceries. You paid the utilities. You saved some. Now you have some extra for that new phone, those shoes, that class you wanted to take. Whatever it is. You have the money you need that month or saved up over time. Then you make the purchase. Guilt free. Debt free. Totally free.
Who told your money where to go? You. That's budgeting. That's liberating. It's this mindset shift that will help you get over the budget's bad rap.
Now, what if you've been undisciplined with your money and are already in debt? More uncontrolled spending won't solve the problem. If you want financial health and freedom, you'll need to start telling your money what to do. It's that simple.
Perhaps you don't know how to budget or maybe you are the man/woman of a thousand budgets but have never kept one and need some accountability. Either way, please feel free to get in touch. I'd be honored to help you. And increase Budget's approval rating while I'm at it. It's time for a change.
Rehab Tip: Check out my favorite budgeting app: You Need a Budget. It has everything you need to get started budgeting or taking your budgeting game to the next level. I use it weekly for our family's budget. It has a yearly fee but for what it can do, it's totally worth it. Bonus tip: Every Dollar is a great basic and free app option.
I had some terrible coaches when I played high school baseball. It boiled down to one thing. They yelled. Like, they yelled a lot. I never did enough. I never did anything right enough.
I felt hopeless. I had no confidence. I wasn't a courageous player or teammate. I was a shell of what I was before high school (in 7th and 8th grade---my glory years). It was awful enough to make me want to quit.
So I did. I quit playing baseball.
What does this have to do with money? Everything. If our financial life is a bit topsy-turvy, we need something that will inject hope into our situation, instill confidence when the odds are against us, and inspire us to act courageously when the world is telling us to buy another toy.
A financial coach does exactly that. How are you doing financially? Do you need some hope, some confidence, some courage?
You might just need a financial coach.
What's a financial coach? At its core, it's someone who helps you with budgeting, spending, saving, and planning for the future. It's someone who's there to instruct, guide, and hold you accountable. Even if you're doing amazingly when it comes to money, you may have questions about your next best move. A financial coach serves as an impartial friend no matter the situation.
In the end, just like in any sport, financial coaching is about caring well for you and equipping and empowering you to thrive with money. Plain and simple.
I'd be honored to come alongside you as your coach. So, get in touch.
Oh, and I promise I won't yell at you.
There's a good chance you'll get a refund on your taxes this year. In any given year, nearly 70% of Americans receive a refund from the IRS. The average refund was more than $2,890 in 2018.
The big question becomes, "What should I do with my refund?" This morning on my drive to work, one radio commercial tried to convince me to take mine and head to the dealership. Apparently, I need a 2019 Chevy Silverado.
Get behind me, Satan.
'Tis the season for companies telling you what to do with your tax refund. It's funny how it always seems to end up not in your bank account, but in theirs.
I get it. I feel the tug, too. A new car would boost your morale. That vacation to Italy would recharge your emotional battery. The 90s called and it wants its kitchen back. The temptations are endless.
But there's a better way. The good news is that you get to tell your refund what to do and where to go. Here's my recommendation: take that check---what could amount to essentially an extra paycheck---and deposit that cash right into a savings account and never look back.
Here's the hard truth that no dealership or interior designer or travel agent will tell you: you're going to need that cash for something this year. Someone will get sick or break an arm. The AC will die in mid-July. Your car's EGR valve will stop doing its job. In other words, a financial emergency will happen. Not this year? Then next year. Or the next.
Ever heard of Murphy's law? Something will go wrong. Do you have the cash to cover it?
A 2018 poll showed that only 39% of Americans have enough savings to cover a $1000 emergency. Another poll from 2017 revealed 57% of Americans couldn't pay cash for a $500 unexpected expense. It doesn't take much to get to those dollar thresholds. (In case you're wondering, that EGR valve will run you between $200-500 at your local mechanic.)
The first step to financial health is to build an emergency fund for when "life" happens. Start by getting $1,000 in there. Even better if it's your full tax refund. What if you have debt? Put $1,000 in that emergency fund and, if there's still some refund left, put it toward debt. Life doesn't care if you have debt or not. It is going to happen. And you'll need the cash to cover it.
Rehab Tip: Electronic filing with the IRS makes saving your refund easy. You can choose to receive your refund via direct deposit---right into your savings! Plus, when you choose direct deposit, you get your money much faster.
Learning to be financially healthy is not mainly a math issue. Our problem isn't that we don't know how to put numbers on paper, add income and subtract expenses.
Our problem is that we don't do it. Or worse, we don't want to do it.
Being financially healthy is mainly a heart issue. It's not mainly a how-to issue (though, of course, that may be the case at times). In my own experience with money and from observing others, what I've found is that it's a want-to issue.
As with any other area of life--think working out, eating right, organizing that filing cabinet in your basement, cleaning out that garage, planning meals, whatever it is--the main issue is I need to want to do it. If I want to do it, I'll figure out how to do it.
When it comes to our financial health, we have to ask ourselves one, crucial, foundational question, "Do I want to be healthy?"
Sometimes we have to answer that with a "YES!" daily or even multiple times a day.
But once we say "yes" and commit to saying "yes" over and over and over. We're already getting healthy.
I'd even argue the hardest battle is already won.