I have always been fascinated by the propensity of humanity to squander any and all resources in its grasp. Regardless of the item, we as a species have become very good at consuming as much as possible without regard to a better use for each particular item - the way in which we use money is no different. It astounds me so many people are inept when it comes to budgeting money, when failing to do so only causes an individual to accumulate expensive debt, which can take years to get rid of.
Unfortunately, college does little to encourage students to budget wisely. Credit-card solicitors line the campus and a "live for the moment" lifestyle is heavily promoted. Most college students are unlikely to spend money wisely unless such values have already been instilled in them.
Since high school, I have always been told I was cheap. If my friends wanted to eat dinner at TGI Friday's, I would eat at home and go out with them after. It was never a matter of being strapped for cash - I did not see the point in spending $15 at a restaurant I did not particularly enjoy.
Contrary to popular belief, saving money and living wisely does not require the self-control of a Buddhist monk. By simply following a few guidelines, you will be amazed at how painless it is to save money and stay out of debt.
The first rule is to never spend more money in a month than you earn. This is the golden rule of saving money, and if you do nothing more than this you will be in great shape. For example, let's assume you earn $900 each month. The first thing you should do is plan out your fixed expenses: If in a month your rent is $400, your cable bill is $30, your Internet bill is $20 and your cell-phone bill is $75, more than 50 percent of your money is already spent.
The next step is to set limits on your unknown expenses, but keep in mind you only have $375 left. If you drive, you will probably spend $60 for gas each month. If you eat, $150 per month for food seems reasonable. It is fair to say many college students will spend $80 per month on entertainment or alcohol as well. After basic expenses have been paid, you now have $85 left to spend however you please - live it up!
At this point, a credit card is your worst enemy. Though you only have $85 in spending money, you have a $500 credit line on an account, which probably has a 30-percent annual interest rate. If during the month you ring up $120 in incidental expenses, when the credit-card bill arrives, you are unable to make the full payment having only have $85 left. You are forced to pay the minimum amount due and you make a promise to yourself to cut back on spending next month. One year later, you are surprised to find you have accumulated more than $1,000 in credit card debt.
If you do have a credit card, it is important to remember eventually you will have to pay the bill. In order to avoid the enormous interest charges, you have to keep track of how much you spend each month and how much you have left to spend. If you only have $50 to live on for the rest of the month, do not go out and spend $150 at Fashion Valley.
The biggest obstacle standing in the way of sane spending habits is impulse buying. Humans are impulsive by nature; when we see something we like, we want it. If you can afford a $200 pair of jeans, by all means indulge yourself. However, if $200 is a quarter of your monthly income, do yourself a favor and leave the jeans on the rack.
Unfortunately, there really isn't anything sexy about spending your money responsibly - you can't go on shopping sprees and you can't eat out as much. There are some nice perks to saving, though - I am 20 years old and I do not have one cent of debt to my name. I will graduate next Spring without a credit-card balance and having not needed a single student loan. It is possible. It just takes a little work and some self-control.
-Jonathan Sullivan is a finance junior.
-This column does not necessarily reflect the opinion of The Daily Aztec. Send e-mail to letters@thedailyaztec.com. Anonymous letters will not be printed - include your full name, major and year in school.
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