College, in all of its Ramen-eating glory, is a time for cutting corners. Money is often an added stress on top of plenty of school-related responsibility, and if you’re looking to clean up your personal finances, it can be tough to know where to begin. We talked to the Northeastern Center for Financial Independence (CFI) at Thrive, their financial literacy incubator, about their very best strategies for money management. We’ve come up with some handy tips to help you get your money in perfect order.
According to CFI, these are three of the most common questions that they get from students:
- Why should I budget (especially if my main source of income is my parents)?
- What in the world are taxes, and when/how do I do them?
- How should I handle my student loans?
These are all pretty important questions, and all of them can seem pretty intimidating if you’re just starting out on the road to financial independence.
Why should I budget? This question in particular doesn’t have to be scary! Budgeting is just a good habit to be in, even if you’re only making $10 a week walking your neighbor’s dog over the summer. There are a ton of handy tools that can help you compartmentalize and track your spending, giving you more control over your income.
- Mint: This nifty little site hooks up your personal bank account and credit cards to a budgeting system (with bank-level security) that can track your spending, set balance alerts, and help you plan your savings. It’s very easy, super colorful, and always free. They also have a cool set of tools that help you look for new savings accounts, credit cards, and even insurance that fits your budget. They also let you check your credit score for free!
- Excel Budget Template: If you’d rather go a bit more old school or if you’d prefer not to link your bank account to an external website, use an Excel budget template, like this one, to manage your money. It’s built to sort your annual income by month into categories like “Entertainment” and “Savings.” You can also add categories; if you want to budget a specific amount for coffee every month, just insert a row in the “Daily Living” section and it’ll work right into the “Total” and “Average” formulas.
Taxes are coming up!
Monday, April 18th, 2016 is this year’s filing deadline for IRS income taxes. That means filling out a bunch of forms that record your income over the past year for the US government to review. This shows that the proper amount of taxes was taken from your income, and can result in deductions that mean you get some money back. It’s not the most enjoyable thing in the world, but it’s pretty easy for most students. Tax returns generally become more complicated the older you get; for example, when you have kids, you have to list them as dependents. There’s a lot of tax software out there, like TurboTax, that can make the process easier for a fee. You can also use the free software provided by the IRS, found here. Some other tips:
- Always file your income taxes. If you’re a dependent student who made less than $6,1000 in 2015, you are not required by law to file. If you’re not a dependent, then you don’t have to file if you made less than $10,300. BUT, if any of your paychecks show that income taxes have been withheld, you should DEFINITELY file anyway because you could get some of that money back.
- You can’t claim exemptions if you’re a dependent (meaning your parents already claimed you on their tax returns).
- If you’re paying for your education yourself, you may be eligible for more tax deductions!
- Beware of scams! Always always always be very careful with your financial information and social security number, both of which are included in your tax returns. If you choose to purchase tax software, make sure it’s reputable. The free IRS software is guaranteed to be confidential.
On March 15th, Thrive is hosting Turn Up For Taxes, an info session to answer your general questions about how to file your tax returns. Sign up here!
Student loans are great when they help you earn your degree, but can be overwhelming for recent grads just starting out. They can also be pretty confusing. Your best strategy for keeping them in check is knowing them inside-out. If your parents are the ones who set up your tuition payment plan, have them walk you through the loans portion. If you still have questions, schedule an appointment with a financial advisor (through myNEU) so they can explain how much you’ll need to pay, when/how often you’ll need to pay, and how long it will take to pay off your loan completely. Once you’ve got a timeline, you can think about how you’ll budget for the loan payments after graduation so there are zero surprises!
Thrive is hosting an event on March 3rd called Grads to Grownups, which will bring some NU alumni back to campus to discuss how they made the transition from school to the real world, student loans and all. Sign up here!
Other Fun Stuff
Financial literacy is pretty important, particularly seeing as you’re a capable human who is going to have a real job pretty soon. Just a few words to know:
- IRS: You’ve probably heard your parents complain about this before. The Internal Revenue Service is a branch of the federal government that collects taxes and goes over your tax returns to make sure everyone is paying their fair share. They also investigate people/businesses for tax fraud in what’s called an audit, and it’s not fun. All the more reason to do your taxes correctly!
- 401(k): No no, it’s not a robot. It’s a retirement savings plan sponsored by your employer. Too young to think about retirement, you say? There’s no such thing. Businesses offer them and allow you to save a portion of your income before taxes are taken out. Your employer then matches your savings up to a certain amount, usually 3% to 6% of your income. Even if you start out saving a few dollars a month, using your 401(k) to its fullest potential makes a ton of financial sense.
- Credit score: What is a credit score, anyway? Well, it’s a three-digit number that represents how worthy you are of borrowing money. It’s one factor that banks and credit card companies look at when they’re decided whether or not to lend to you. High scores are good and low scores are bad. Unless you’re just a money wizard who had an immaculately maintained credit card before the age of eighteen, chances are you’re going to start off your twenties with a pretty low credit score. That’s ok, it just means that since you haven’t borrowed much yet, there’s no record of you being creditworthy. As you open credit cards and borrow in other ways, your score will rise as you pay back your debts on time.
Boston is also home to the Society of Grownups, a self-described “masters program for adulthood” where you can go for advice on everything from personal finances to investing in the stock market. They have tons of events that bring young adults from the Boston area together to learn about adult stuff, but always with a fun twist.
For all Thrive events, articles, and more awesome tips, check out their Facebook page for regular updates.
To work out your individualized plan with CFI, book a one-on-one meeting with the Personal Finance Advisor. You can also stop by the Thrive office, located on the 1st floor of Curry, to talk to a student leader during walk-in hours (9-5, M-F).