Do you want to budget and manage your money more effectively? The key is not to approach these tasks as math-heavy chores, but rather as behaviors and actions that can be easily and unconsciously integrated into your life once formed into habits.

The average United States household carried $6,849 in credit card debt in 2019. Why does this matter? Credit card debt is the most common and easiest type of debt to owe — 55% of Americans have this debt — and it accumulates based on your actions. Credit card debt also has some of the highest interest rates, with an average annualized interest rate of 17.89%. This means that, assuming you don’t accumulate more debt during the year, you will be paying about an additional $1225 per year on interest alone. 

Most of us have or will incur additional debt on top of this through student loans, mortgages or car loans. A lot of these debts are unavoidable. However, credit card debt is something that you can control and get ahead of before it snowballs. Budgeting is an easy and free way to take control of your finances and avoid unnecessary and expensive debt. 

As you begin this exciting chapter of freedom at Syracuse University, the responsibility of money management will likely fall on you and will leave you thinking, “Where do I begin?” Budgeting is the foundation of financial freedom and the first step in building economic wealth; it’s also easier than you might think!

Start by gaining an understanding of your basic income and expenses:

1. What are your weekly expenses? Estimates are fine — as you become more conscious of your spending, you will gain a better understanding of your spending habits. Expenses can include food, entertainment, laundry, transportation, textbooks, basically anything that you spend money on regularly. I recommend that you set aside any money you save at the beginning of each budget cycle rather than saving whatever’s left at the end of the week. Let’s be real: if there’s money left over at the end of the week, it will probably go toward a venti macchiato instead of your savings account.

2. What are your incomes? This can include wages from any on-or off-campus jobs, allowance or money saved up for the semester. If you are using money that you saved, be sure to divide it so it can last you through the semester.

3. Add up your expenses and incomes. Is your income able to cover your expenses?

 While keeping a record of your budget will help you, forming responsible spending habits is the most important and effective way to improve your finances. Your incomes and expenses are constantly changing as a student, especially in such an uncertain environment as today’s. 

Maintaining and following a rigid budget takes a great amount of time and discipline. If you already have responsible spending habits —  from making timely credit card payments to limiting egregious spending — budgeting can be seamlessly integrated into your lifestyle.

 If you’ve incurred burdensome expenses related to food, housing, transportation, medicine or tuition due to the COVID-19 crisis, please fill out the CARES Act Funding Request or the International Student COVID Emergency Relief. The Office of Financial Literacy typically recommends that students maintain a personal emergency fund of $500. Should there ever be an early closure of the university, having money saved up to cover moving and travel costs will be helpful.

As always, my fellow Smart Money Coaches and I will be available throughout the semester for virtual one-on-one sessions to guide you through any budgeting, saving, investing or student loan questions you may have!

Andrea Lan is a junior finance major. She is a Smart Money coach in the Office of Financial Literacy. Her column appears bi-weekly. She can be reached at alan01@g.syr.edu.

Published on August 30, 2020 at 9:07 pm