Financial Literacy: Confident Money Management
Empowering You with the Tools for Financial Success
At 91pornÔ´´, we believe financial literacy is essential to your success both during your time here and in life beyond college. That’s why we’ve developed resources to help you build financial understanding and make informed decisions.
This guide provides an overview of key topics like budgeting, credit, saving, investing, and taxes, along with helpful tools and links to external resources to support your financial journey.
In This Guide:
Dive into financial basics with expert Dylan Stroup ’10.
Budgeting
What is a Budget?
A budget is a plan for your money. By tracking income and expenses, you can create a framework for how to spend, save, and prepare for the future.
Why is Budgeting Important?
If you’ve ever looked at your bank account and wondered where your money went, budgeting can provide clarity. Spending more than you earn is one of the most common financial pitfalls. With a flexible, realistic budget, you can control your finances, reduce stress, and prioritize what matters most.
Steps to Start Budgeting
- Estimate Your Expenses: Create a rough budget with your expected monthly expenses, broken into categories like rent, books, groceries, and entertainment.
- Track Your Spending: Monitor your actual expenses for a few months and compare them with your estimates to identify discrepancies
- Compare Income to Expenses: If you’re spending more than you’re earning, make adjustments to your budget.
- Differentiate Needs vs. Wants: Small changes, like limiting daily coffee purchases, can result in significant savings over time.
- Review and Adjust Regularly: Budgets should evolve with your income, goals, and lifestyle changes.
Our Community Support Coordinator (Case Manager), Aileen Thompson, has a sample budget sheet she often shares with students. She's happy to meet with students through case management and discuss this in more detail. Learn more and contact Aileen today!
- PocketGuard: A free budget app that connects your checking, credit, and savings accounts. It detects recurring bills and income, showing how much is available for everyday spending by subtracting upcoming bills, savings goal contributions, and pre-budgeted money from your estimated income. ()
- Zeta: A free budgeting app designed specifically for couples, joint finances or not. The app caters to all types of couples, including those who are living together, engaged, married, or new parents. Sync various accounts to track spending, see your net worth, and manage bills together. ()
- Honeydue: Allows you and your partner to see both financial pictures in one spot, including bank accounts, credit cards, loans, and investments. You can choose how much you share with your significant other. The app categorizes expenses automatically but allows for custom categories. ()
- Personal Capital: Offers the best free tools for wealth building. Sync your financial accounts in one place to track your net worth, plan for the future with the Retirement Planner, and use the Fee Analyzer to check portfolio fees. ()
- YNAB ("why-nab"): A zero-based budgeting app option that also offers educational resources. Once your accounts are synced, YNAB will suggest allocations across categories such as savings, spending, and debt. Though pricier than other options, it offers a free trial year for college students.
- EveryDollar: A zero-based budgeting app that does not require syncing your financial accounts, but it means entering every transaction manually. Upgrading to the paid version allows account syncing.
- Goodbudget: Uses the envelope budgeting method, where you allocate incoming funds toward different envelopes or categories. The basic and plus versions do not sync with your bank accounts, so you must manually enter income and spending.
Credit
Credit Report vs. Credit Score
- Credit Report: A detailed record of your credit history, including personal information and a list of open and closed accounts. Get your free annual credit report at .
- Credit Score: A numerical representation of your creditworthiness. Scores range from 300-850, with higher scores indicating lower risk to lenders.
Why Credit Matters
Good credit can save you money by lowering interest rates on loans and credit cards. It’s also essential for renting apartments, securing employment, and even getting insurance.
Key Components of a Credit Score
- Payment History (35%): Make on-time payments to maintain or improve your score.
- Debt Utilization (30%): Keep credit usage below 30% of your available limit.
- Length of Credit History (15%): Start early and maintain long-term accounts.
- New Credit (10%): Avoid frequent hard inquiries.
- Credit Mix (10%): A mix of credit types (e.g., student loans, credit cards) can enhance your score.
- : Free annual credit reports.
- : Tips for building and maintaining good credit.
- US News Student Credit Card Survey: Insights into common credit topics and best practices for students.
Saving and Investing
Tips for Getting Started
- Pay Yourself First: Automatically transfer a portion of your paycheck to savings.
- Track Progress: Use mobile banking to monitor your savings growth.
- Set Goals: Whether it’s building an emergency fund or saving for a major purchase, clear goals can keep you motivated.
Thinking Ahead: Investing
- Start Early: Compound interest allows your money to grow faster over time. Use the SEC Compound Interest Calculator to see the impact of starting now.
- Understand Risk: Short-term goals often call for conservative investments, while long-term goals like retirement can benefit from higher-risk options.
- Plan Ahead: Set a strategy for reaching both short- and long-term financial milestones.
Taxes
Do You Need to File Taxes?
Your requirement to file taxes depends on how much you earned and the amount withheld from your paycheck. Even if filing isn’t mandatory, doing so may result in a refund.
If you’re working during the calendar year, either at 91pornÔ´´ or off-campus, you’ll likely receive tax documents at the end of the year. You can use the resources below, as well as contacting a tax professional, to help you understand if you need to file taxes.
If you received a stipend from 91pornÔ´´, you’ll receive a 1099-MISC with the amount that you earned on the stipend in the calendar year.
Tax Benefits for Students
- American Opportunity Credit: Up to $2,500 per eligible student for education expenses.
- Lifetime Learning Credit: Up to $2,000 annually without a limit on usage.
- Tuition and Fees Deduction: Deduct up to $4,000 in qualified expenses.
- Student Loan Interest Deduction: Deduct up to $2,500 in interest paid on student loans.
- : Overview of tax benefits for education.
- IRS Publication 970: Comprehensive guide on tax benefits for education.
- 91pornÔ´´â€™s Financial Aid Office: Assistance with tax-related questions for students.
Federal Student Loan Repayment
Learn more about how to prepare for your federal student loan repayment. If you borrowed Federal Direct loans, you are entitled to a six-month grace period before your first loan payment is due after graduation or withdrawing from 91pornÔ´´. If you follow the simple steps outlined below, you'll ensure that you start off on the right track when repaying your loans and avoid the consequences of student loan default.
Step 1: Complete Exit Counseling
Exit counseling will help you understand your rights and responsibilities as a student loan borrower and will provide useful tips and information to help you manage your loans. It can be completed online, in about 30 minutes, through StudentLoans.gov.
Step 2: Know What You Owe and Who You Owe
The National Student Loan Data System (NSLDS) provides comprehensive information about your federal loan history, including lender and servicer contact information, loan totals, and loan status. You can access all of this useful information by logging onto NSLDS.ed.gov.
Step 3: Determine What You Can Afford to Pay Each Month
Education lenders and servicers generally recommend that student loan payments not exceed 8 to 10 percent of the borrower's gross income. For example, if your starting salary is $45,000, generally you can afford monthly student loan payments of no more than $300 to $375.
Step 4: Choose a Repayment Plan
You have several loan repayment options! Most borrowers are automatically enrolled in the standard repayment plan, which means you will have a fixed monthly payment of at least $50 over 10 years or less. A complete list of repayment plans, as well as payment calculators for each plan, is available online at studentaid.gov.
Step 5: Keep in Touch
Don't ignore your servicers! Be sure to read the mail they send you, answer their calls, and respond when necessary. If you move or change your contact information, let your servicer(s) know immediately so they can get in touch with you. Borrowers who fail to notify their lender or servicer of these changes may incur additional charges for missed or late payments and risk severe penalties for student loan default.
Federal Student Loan Repayment Resources
- : Learn about managing student loans and repayment.
Additional Resources
- : Explore guides and tools for financial planning.
- : Government resources on budgeting, saving, and investing.
Resources for Parents
Take control of your finances today to build a strong foundation for tomorrow. If you have questions or need further assistance, the 91pornÔ´´ Financial Aid Office is here to help.
finaid@moravian.edu
610-861-1330