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[ technology ] [ college spending]
college
smarts
being financially savvy in school leads to a better
life in the real world • by chris warren
D
uring college, Sanyika Calloway Boyce was con- premely confident when the human resources person con-
vinced that her future would be one of limitless firmed to her that, yes, she was the best candidate for the
opportunities. She excelled at school, was al- job and that they wanted very much to offer her the position.
ways an honors student and was so precocious But what she heard next floored her. “In considering you as
that she ultimately graduated a semester early. Understand- a final candidate we also had to consider your credit report,”
ably, she was confident about her post-college prospects. “I Calloway Boyce recalls the HR person saying. “And in doing
had been told all my life that I was smart, I’d have nothing to so, we realized that you have not been personally respon-
worry about,” she recalls. “People said, ‘You’ll have compa- sible with your finances and we can’t trust that you will be
nies beating down the door to hire you.’” responsible with ours.”
And, at first, they did. After earning her diploma from Nor- It was a life-changing moment for Calloway Boyce, one that
folk State University in Virginia and moving to New York City, ultimately led her to become a personal finance author (her
Calloway Boyce went through three rounds of interviews books include Crack Da Code: What Every College Student
with the company of her dreams. She remembers being su- Needs To Know About Money, Love & The Dream Job) coach
photographs: book by stockbyte/superstock; girl by image 100/jupiter images
winter
07
11
today’s focus
[ college spending ] [ technology ]
and a speaker whose expertise, not coincidentally, includes help- indebtedness, financial experts frequently pinpoint two big cul- gets don’t work is that they are restrictive,” she says.“But a spending
ing college students avoid financial pitfalls and the severe conse- prits: near constant pressure to spend money, be it on Friday- plan tells you where your money goes.”
quences they bring. night pizza or a road trip to Florida, and a lack of basic personal
finance knowledge. A Spending Plan
A New Freedom The first part of developing a spending plan is to have a clear-
Calloway Boyce’s story is all too common.Thrilled with the in- Credit Course headed picture of exactly how you spend money. To do that,
dependence and social freedom college life brings, she enjoyed That lack of knowledge can have long-term consequences. Calloway Boyce suggests keeping receipts of every single penny
a financial lifestyle that she couldn’t afford. There were trips When Flora Williams, a professor emerita in the department of shelled out in a week. Reviewing all those expenditures will
for spring break, restaurant meals and a new wardrobe that was consumer science and retailing at Purdue University in Indiana, paint a picture of one’s financial habits, such as buying a soda
a far cry from the hand-me-downs she was accustomed to as a provided financial counseling to students, she found that they every afternoon. When Calloway Boyce went through this ex-
child. With little or no income, she relied on credit to pay for frequently misconstrued credit cards as akin to salary. “The prob- ercise herself she was shocked to see that, based on her weekly
things, ultimately accumulating 10 credit cards and $15,000
in debt during her school tenure.
lem is, they assume that credit is income rather than debt,” says
Williams. “One of the more helpful things was for them to grasp
receipts, she was spending almost $1,500 a year on coffee. “It was
very sobering to realize I was spending so much money on cof-
Setting Something Aside
parents put one college student on the
But here’s a surprise: When Calloway Boyce addresses college that credit is debt, not money.” fee, and I instantly, in that moment, made a decision to buy less road to financial responsibility
students today and tells them her story, she doesn’t warn them to Williams says that when students understand that the pizza they of it,” she says.
avoid her mistakes. Instead, she tells them that spring break was pay for with a credit card might end up costing three or four times A moment such as that coffee sticker shock often leads Sarah Bobulsky says her financial life is a balancing
really, really fun, that it was a blast going out with her friends more than the original bill—depending on the interest rate and the people to change their habits, Calloway Boyce believes. act. She has a debit card; she has a credit card. Us-
and that the new clothes she bought were very nice. That said, unpaid balance on the card—it gives them some very legitimate Knowing where their money goes allows college students ing the debit card to keep debt down while having
the eight years after college were the toughest years of her life, a pause, particularly if they go a step further and calculate how long to make their own decisions about spending, a far more ef- access to a credit card is, for her, the ideal solution
time in which she never once went on vacation, couldn’t apply they’ll have to work to pay for that particular item. “I’m going to fective method than a budget, which places restrictions on to the budgeting challenges of college life. A native
for an apartment, let alone a mortgage, or buy a car, because her have to work so many hours to buy this thing on credit. How many what can be arbitrary categories. “You get to decide based of Ohio and a junior at Brown University in Provi-
credit was so dreadful. And, of course, she lost out on a great job. hours is it worth it?” she says.“Money will talk to the students when on your spending plan what you want to keep and what dence, Rhode Island, Bobulsky says that her parents
Ultimately, she tells students that they have to make a decision. “I they think about that.” is absolutely important to you, and what you want to give made it clear to her at an early age that she was ex-
simply tell them how I chose to live and what the consequences But some personal finance experts believe that credit cards are up,” says Calloway Boyce. “And most of the students I work pected to foot the bill for most of the miscellaneous
were,” she says.“Do you want to be cool and do what it seems like important to have not only for emergencies but also, if used proper- with, when they see the numbers in black and white, begin expenses in her life. While her parents were happy to
everybody is doing right now or do you want to set yourself up ly, for establishing the kind of good credit it takes to land a job, get to make a subtle shift.” pay for big-picture items, like anything related to her
for the back end?” a mortgage or buy a car. Credit cards can be a tremendous finan- The worst thing for students in debt to do is to ignore the education, they wanted her to learn to take respon-
cial tool when they’re used responsibly. They’re convenient and situation. Calloway Boyce suggests being proactive: Contact a sibility for managing money. To do that, Bobulsky
Too Many Friday-Night Pizzas a helpful resource in an emergency situation. For young people, creditor to try to work out some sort of payment plan, even if began working the summer after eighth grade and
If statistics are any guide, there are plenty of college students in particular, they’re one of the few ways to establish oneself as a the total bill or the minimum payment seems to be out of reach. held down a job through most of high school.
who struggle to manage their finances and to avoid credit-card financially responsible person, the kind of person companies want “Ask if you can do $10, $25, $50, anything to maintain the rela- During her freshman year, she focused on her stud-
debt. Indeed, according to Nellie Mae, a student loan compa- to hire or to whom they want to lend money. tionship,” she says. “Contact them and communicate often.” ies, but now Bobulsky has again taken a job. She uses
ny, the average college senior has a $2,864 credit-card balance. Calloway Boyce believes that one of the keys to a financially It’s certainly not ideal to spend your way deep into debt in the her paycheck and her debit card to ensure that she
One recent nationwide survey found that roughly one in four successful college career is to avoid rigid budgeting. That’s right, no first place, but it is possible to bounce back. And the effort it takes always stays on firm financial footing. “My debit card is
college students feels very or extremely stressed about their budget. Instead, she advocates using a spending plan, which, she be- to get to that point has huge rewards. It beats being stressed about my money,” she says. “It’s essentially cash.”
finances. While there are certainly many factors that contribute to lieves, is a much more effective approach. “So often the reason bud- managing bills or worrying that a crummy credit report is going Her credit card is only for items that her parents
to cost you a good job. For Calloway have agreed to pay for, such as books. Bobulsky says
winter
Boyce, it all comes down to learning that simply knowing she has to pay for most things
90% 40% 52% 40%
to have a healthy relationship with makes her focus on planning and saving for purchas-
07
What kids
30%
12 money. “It’s what I do, and it’s what I es. “I set aside money for the one or two things I want
think tell everyone I speak to,” she says. “You to buy in the next six months or eight months,” she
13
today’s focus
A recent survey don’t have to give up your freedom to says. For instance, Bobulsky is spending the fall se-
of 1,000 college said that they said that they were said that they said that getting a said their best advice have control over your money. In fact, mester of her junior year overseas, in Prague, and has
upperclassmen were unprepared stressed to one had skipped meals job during school for freshmen about the best way to have freedom is to be been tucking aside money so she’ll be able to travel in
conducted by Harris to manage their degree or another some of the time helps students be using credit cards is
Polling for KeyBank in control of your money.” g Europe on weekends and vacations.
own money in the by their financial because they ran more responsible to pay off the balance
revealed that: freshman year situation out of money about money each month
photograph by charles gupton/corbis photo credit tk
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