Aug. 18, 2005

COLLEGE STATION – For college students and other young adults just starting out, keeping track of personal finances can seem overwhelming, said a Texas Cooperative Extension expert. But basic mathematics plus a little common sense can go a long way toward keeping finances in line.

"Being on your own in the financial world, you need to develop some knowledge and skills and strategies to make the most of the money you have," said Nancy Granovsky, Extension family economics specialist.

The first step involves a little basic math, she said.

"The first thing you need to know – and it's hard – is what are your expenses going to be," Granovsky said. "If you're going to school you will know some (expenses), but some, such as the price of books, are going to be a surprise.

"It would be beneficial for students to work out their costs early in the semester to make sure their money lasts," she said. "Curb your discretionary spending! The easiest way to do that is look for inexpensive or free things to do on campus or in the community; to plan car use with the price of gas in mind. The cost of gasoline is a factor, especially for people getting used to a new area."

That holds true when it comes to telephone use too, Granovsky said.

"Minimize cell phone plan expenses by selecting a cell phone plan that meets your needs," she said. "One way to do that is to use a pre-paid cell phone plan, which becomes self-limiting."

With these plans, the purchaser buys a certain number of calling minutes rather than signing a long-term contract.

Granovsky offered some other suggestions for keeping expenses down and under control:

- Track spending to avoid overdraft fees. When using debit cards or an ATM to make withdrawals from your account, always keep receipts and record the amount as soon as possible. Be sure to write down any transaction fees charged.

- Limit the amount of discretionary spending and don't spend all your "fun money" at the beginning of the semester. Know the difference between "wants" and "needs."

- Learn how to budget in order to make money last over the entire budgeting period, whether it's a single semester or an entire year.

- Know how much debt is too much. If using a credit card, pay more than the minimum amount due each month.

- Set and achieve financial goals, whether that means opening and adding to a savings account or shaving off a little more from the expenses column each month.

"Learn to pay bills on time; to understand the cost of credit; to be able to save," Granovsky said.

Young adults also need to learn the importance of car insurance, health insurance, life insurance and renters insurance, and how insurance can lessen unexpected financial risk, she said

They also need to know about "saving for the future and investing money and what the value of money is all about," she added.

Basic arithmetic comes in handy here too, Granovsky said, especially when it comes to finding out about "the cost of credit as well as how money grows – the credit side as well as the investment side."

She also advised learning about:

- Getting good values through comparison shopping;

- Being a good credit risk and knowing how credit scores affect your ability to borrow money;

- Protecting your identity from theft by being careful about personal financial information;

- Avoiding fraud: If it sounds too good to be true it probably is; and

- Resolving consumer problems.

"Not all kids (starting out) are going to know how to do all these things, but they are pretty good rules for consumers of any age," Granovsky said.

For more information on family economics, visit Extension's Family and Consumer Sciences Web site at http://fcs.tamu.edu/ and click on the link to Money.