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How to Budget for the Summer

School’s out, the weather is nice, the pools are open…its must be summertime. The summer is a great time to get outdoors, try something new, go on vacation. There’s is so much you can do, but with extra summer fun, come extra summer expenses, and although we might wish we had money to do everything, that sadly is often not the case. However, if planned for effectively, summer can be a time where you save and smartly manage money on a budget while having all the fun in the world. Let’s review how to budget this summer and brainstorm some fun but smart money saving activities.

Set Goals

The first step with any budget should be to determine, “why am I making a budget?” Am I making a budget to save money? If so, what am I saving for? These are important questions to ask ourselves to find our motivation for making a budget. If we don’t have proper motivation or goals, it will be hard to make consistent smart money managing choices toward saving. One goal could be that you want to save money so you can go on a vacation, or buy a certain item, or maybe you just want to save $1,000 by the end of the summer. All of these are good goals to make, the important thing to remember is that your goals should SMART – Specific, Measurable, Attainable, Relevant, and have a set Time-frame.

Specific – Make sure your goals aren’t vague are distant. You define a clear goal or action that you want to save for. For example, “I want to save for a new laptop for school next year. The one I want is $600.”

Measurable – Something you can build to. This would mean not just saying, “I want some money for a vacation”, but instead saying, “I want to save $700 over the next 3 months, to save for my vacation in 4 months.” The second statement has a set dollar amount and timeframe which we’ll get to in a minute.

Attainable – Your goal should be something that can be realistically achieved through the means you have at your disposal. Don’t commit to try and save $5000 in a year when you only make $200 a month. That’s not attainable. Instead, you could try and save maybe $1,000 in a year.

Relevant – Have your goal be applicable to you and something you can save for. This may be dependent on what some of the other factors are or what your priorities are. If you have $10,000 plus in student loans but still have 2 years of school left and feel like you’re drowning in school, a $100 weekend mental health trip might be more relevant then giving that money towards your loans.

Time-frame – Be specific in how long you want to save or budget for. Based on the saving statements made in the measurable definition, save for a specific set of time. This helps you keep on pace in your budgeting process.

Make Your Budget

Now that you’ve come up with your smart goal, your summer budget can be made! This can be hard to do sometimes though. The good news is, at Powercat Financial, we have some great tools to help. Check out our budget spreadsheet, which provides a detailed list of possible expenses so you don’t miss anything when creating your personalized budget. You can make an appointment with us at Powercat Financial, and we would love to help walk through this with you.

Another helpful goal setting resources is levylup.com. You can create an account and start making goals to save for—it’s under development, so you can provide feedback to help it become a tool that truly fits your needs.

Another well-established resource is mint.com. Mint offers a budget framework to help you stay locked in on your budget and easily keep track of your expenses.

Summer Activities on a Budget

We’ve set a goal and made a budget, but does that mean that we just sit inside all summer twiddling our thumbs until we’ve saved for our goal? NO! There’s all sorts of fun activities and things to do without breaking the budget. Here’s a few different activities:

  1. Go Outside – This sounds simple and obvious, but it’s true! Going outside is free and can be very relaxing and fun, especially with friends.
NPS Photo/Mitch Smith
  1. Play Disc Golf – Disc golf is an outside sport that is usually free to play. There are disc golf courses all over the place that combine skill, games, and the outdoors for a fun experience!
  2. Go To a Cheap Movie – Some movie theatres will have cheap and sometimes even free movies over the summer. This is a great way to have some fun with friends or by yourself this summer!
  3. Get a Library Card – The summer can be a great time to finally catch up on some books from your library that are on your reading list. You could take a good book and go read in the park or just in the comfort of your own home. Reading a book is a portable but fun and productive endeavor.
  4. Go Hammocking – Hammocking is an awesome way to enjoy the weather outside will relaxing and being in the shade. It isn’t hard to do and all you need is a hammock and two close-together trees.
  5. Go Geocaching – Geocaching is a way you can go on an adventure for free. There’s plenty of Geocaching spots around town that might have some kind of prize or treasure just waiting to be discovered.
  6. Play a Board Game – Board Games can be fun to do with anyone and take very little financial investment. Take it to a park and play, or just play at home, either way board games are a blast.

Get Help at Powercat Financial

Whatever you plan or do this summer, remember to make a budget, and stick to it! This will be key to achieving goals for summer and beyond! If you need any help in determining your goals or have any questions about making a budget, make a free appointment with us at Powercat Financial. We offer free confidential appointments either via Zoom, or in person. Have a great summer!

Daniel Hensarling
Peer Counselor I
Powercat Financial
https://www.k-state.edu/powercatfinancial/

Junk Fees: The Hidden Cost of Consumerism

Have you ever noticed being charged additional fees at the end of a buying process? Most individuals would say they haven’t noticed anything or that they resign themselves to paying these additional fees. These surcharges are known as junk fees and can be described as hidden or unexpected charges that are typically not included in the initial price of a transaction but are rather tacked on at the time the payment is made or even after. These junk fees are a source of revenue in many industries, including transportation, banking, internet, hospitality, music, and more. To put this in perspective, the following statistics show how much these surcharges add up:

  • The Consumer Financial Protection Bureau (CFPB) issued a report showing that credit card issuers charged $12 billion in late fees in 2020.
  • The CFPB also reported $15.47 billion in overdraft and non-sufficient funds (NSF) revenue in 2019.
  • Total fees and surcharges collected by U.S. hotels reached a record level of $2.93 billion in 2018.
  • The Bureau of Transportation Statistics reported $5.97 billion in airline baggage and change fees in 2021.
  • Hidden cable fees were reported to be 28 billion in 2019.

Bar chart visually showing the quantity of fees listed by category.

As these statistics reveal, fees account for tens of billions of dollars in revenue in many industries, which hurts market competition and results in consumers having to pay more in costs.

On the bright side, President Biden announced at his State of the Union Address that “[Fees] add up to hundreds of dollars a month. They make it harder for you to pay for bills or afford that family trip. I know how unfair it feels when a company overcharges you and gets away with it. Not anymore. We have written a bill to stop it all. It’s called the Junk Fee Prevention Act.” Biden called on Congress to pass the Junk Fee Prevention Act, which would reduce excessive fees and unexpected charges.

The Junk Fee Prevention Act and the government’s main focus is to implement the following changes:

  • Cut off hidden resort and destination fees.
  • Ban airline fees that are associated with family members sitting with their younger children.
  • Remove excessive, entertainment ticket fees which are most likely seen when purchasing online tickets for concerts, sporting events, etc.
  • Eliminate early termination fees for TV, phone, and internet services.

For consumers, these changes mean that they will be able to save thousands of dollars a year by eliminating surcharges being tacked onto their purchases unknowingly. Some countries have already taken steps to require companies to disclose all fees upfront and to prevent companies from charging excessive fees. The Consumer Financial Protection Bureau aims to lower penalties for late credit card payments, setting a goal to reduce fees to as little as $8 when they are currently as high as $41 for a single missed payment. The CFPB announced that they are planning on putting such an adjustment into effect by next year, after receiving public feedback on the measure. Apart from that, the Department of Transportation proposed their actions on airline tickets, requiring airlines to disclose all fees up front. Many more actions will come into play to help reduce excessive fees and unexpected charges in other industries, saving consumers hundreds of dollars a month.

Image of merchant card scanner screen with a credit card and money with wings flying away.

The concealment and accumulation of these Junk Fees are comparable to spending “leaks”, which is an important concept that counselors at Powercat Financial cover to help give students a better idea of small spending habits that can really affect them in the long run. Adjusting your spending habits can help you cut back on these little amounts that initially appear to be little but add up to be much more over time. The accumulation of junk fees can also make it difficult for consumers to budget effectively. If a consumer is not aware of all the fees associated with a particular purchase, they may not be able to accurately plan for the total cost. This can be particularly challenging for low-income consumers who may be working with limited resources and tight budgets. It is important for consumers to be educated and aware of the types of fees that they may encounter when purchasing goods or services.

Please stop by Powercat Financial on the third floor of the student union, and we can help get you started on creating your budget to allow you to achieve your financial goals and to receive help on identifying any of these small amounts that add up over time. If you have questions regarding further financial topics, Powercat Financial is here to help. We offer free and confidential appointments in-person and via zoom over student loans, repayment options, budgeting, saving, credit and debt management, and more. Appointment requests can be made online at www.ksu.edu/powercatfinancial!

Quinton Vlach
Peer Counselor I
Powercat Financial
www.k-state.edu/powercatfinancial

Start Saving Now!

Planning for a future 40 years from today may seem impossible, crazy, and downright unnecessary… especially when it’s hard enough to see past that dreadful exam you haven’t started studying for. While retirement is in the far off future, saving for retirement early will help you maintain your standard of living as you enter your 70s and help you avoid turning back to your college ramen noodle diet.

Why Save Now?

Ideally, you should start saving in your 20s, once you graduate and begin earning paychecks. By starting a retirement fund today, your investment will have more time to grow and compound, meaning that each year’s gains will generate their own gains next year. The following graph shows the impact of investing early.

This chart assumes a 7% annual return. Investing $5,000 annually between the ages of 25 and 65 will result in a total of $1,142,811 for retirement. Your retirement fund will have $602,070 more than if you would have waited to make the exact same investment…10 years later. For further comparison, if you only invested between the ages of 25-35 (10 years), you would have earned $61,329 more than investing between the ages of 35-65 (30 years), all else equal.

Image result for growth of savings assets jp morgan

 

 

 

 

That sounds great! So how do I get started?

How you plan for retirement when you’re younger will differ from when you’re older. When you’re younger, you should save at least 7% of your salary for retirement. With the average salary of those between the ages of 20-30, $32,000, your average annual retirement savings will be approximately $2,240. This equates to putting away $43 per week, or giving up a few Starbucks coffees or Uber rides.

Many employers will offer a 401(k) retirement savings plan. If your employer offers to match your 401(k) contribution, take advantage of this benefit by contributing at least the amount that they’ll match. By doing so, you will double your retirement contributions at no additional cost to you.

If your employer does not offer a 401(k) plan, you might consider an IRA (Individual Retirement Account) as a means of investing for retirement due to their tax savings. You can open an IRA through your bank, or other entities such as Wells Fargo or Edward Jones. When choosing what to invest in, you will want to invest more aggressively when you are younger. This means you will want to invest in high-risk/high-yield options, such as stocks. Even if your investments perform poorly in the short run, you will have time to recover financially prior to retirement. Investing is no easy task and many choose to hire a financial planner. To ensure your planner is top-notch, you can utilize http://www.plannersearch.org/ to search for planners who are certified.

I Can Rely on Social Security, Can’t I?

In order to be well prepared for retirement, it is a good rule of thumb to save the equivalent of 85% of your end-of-career salary for each year of retirement. For example, let’s say you make $80,000 per year at the end of your career. You will therefore need approximately $68,000 per year in retirement, or a total of $1,360,000 for all 20 years. The average Social Security monthly retirement payment is only $1,334.21. This comes out to just $16,010.52 per year, leaving you $51,989.48 short each year.

Budgeting Your Life with Your Finances

Saving for retirement shouldn’t mean compromising your dreams and goals in your 20s. By creating and utilizing a budget, you can balance your financial responsibilities (saving for retirement, student loan payments, rent, etc.) with the things that matter to you (buying that engagement ring, backpacking across Europe, finally buying food other than ramen, etc.). To kick start your budget, you can utilize the Spending Plan Worksheet that can be found at www.k-state.edu/pfc/budgeting. For more hands on help with saving for retirement or budgeting, feel free to set up an appointment with a peer financial counselor by going to www.k-state.edu/pfc/services.  By making the choice to start saving for retirement today, you will greatly increase your wealth, opportunities, and lifestyle in the future.

Sources:

www.saltmoney.org

http://www.cheatsheet.com/money-career/3-big-benefits-of-saving-early-for-retirement.html/?a=viewall

www.jpmorgan.com

Jillian Taylor
Peer Counselor III
Powercat Financial Counseling

Your New Year’s Money Resolution

The New Year will be here in a few short weeks. With finals and the busy holiday season approaching, the New Year will be here before we know it. Around the end of the year we start to reflect, wondering if it went as planned. Maybe 2015 brought some unexpected financial hardships, maybe you ended up spending more than you earned, and maybe your student loan debt grew and grew this year. All of these situations can seem overwhelming. That is why PFC is here to help. Remember, you can always request an appointment at www.ksu.edu/pfc for personalized help. But below are a couple generalized tips to keeping your financial goals, or New Year’s Money Resolution for 2016 in line.

What if I am happy with my finances?

You may be thinking you don’t really need to change any part of your finances. But it is important to remember that the unexpected could always happen or things may not go exactly according to plan. So if you are one of the lucky students who have little, or no student loans, maybe you could work on building your credit. Or if you have an excess amount of money each month, instead of splurging on a trip to the mall, put it into an emergency savings account fund. The point is that even if your financial situation seems great, there is always something to work on to make it that much better.

What do I do if I need to start up a new and improved budget for the year?

Although it is difficult to change the things of the past, you can always plan for the future. 2016 may bring many obstacles and your financial stress could be at an all time high. If this is the case and you need to vamp up your budget, you can visit our website at www.ksu.edu/pfc/budgeting for some information on budgets. Don’t get discouraged if 2015 didn’t go as planned. Sometimes it can be hard to stick to a budget. Try to get a fresh start for 2016 and push yourself to stick to a realistic budget that allows you to spend money where you want. Remember, sometimes it doesn’t always seem this way, but budgets are your friend. They help you stick to a plan, which can be essential for you to reach your long-term financial goals.

How can I build my credit throughout the year?

Credit can be a scary thing. Just remember, that like a budget, credit is your friend. A good credit history can help you get a lower mortgage rate or a higher credit limit, as well as benefit you in other ways. If your goal for the New Year is to gain some good credit history but you don’t want to change much about your spending habits a credit card might be for you. There are other ways to establish credit like: auto loans, secured credit cards, and student loans. Visit our website, www.ksu.edu/pfc/credit to learn more about the various types of credit and find out which one may work for you. If you are making payments currently on your student loans this is helping to build your credit history. If you want to build existing credit make sure you are always paying your bills on time, and using your credit wisely- we recommend about 30% of your credit limit. Another important tip to remember is to check your credit report for discrepancies, if there is incorrect information on your credit report, clearing this up can dramatically increase your credit score immediately. You can check your credit report at www.annualcreditreport.com 3 times a year, one per credit bureau, for free.

Finally, no matter your financial situation, do not get discouraged. A year is a long time and a resolution is in fact that, a resolution, a goal, something you are aspiring towards. So if it doesn’t go as planned immediately, or if you have a couple hiccups throughout the year don’t give up! Just check in on yourself periodically, or have a friend or family member hold you accountable if need be. Good luck! And happy (almost) 2016!

Hillary Williams
Peer Counselor I
Powercat Financial Counseling
www.k-state.edu/pfc

New Year, New Financial Attitude

Believe it or not, 2015 will be coming to an end before we know.  With that for many people comes a “New Years Resolution” and financial stress. As December approaches, it is important to spend some time reviewing the past year and making goals for the upcoming year.  Some tips to consider when preparing for the new year are: budgeting, goals, financial literacy, and savings.

If you haven’t made a budget, it is a great first step towards achieving financial success.  Budgeting can be overwhelming for some people, but just keep in mind that it is a process and requires both time and work.  Use December expenses and income as a rough draft for your budget so when the beginning of the year rolls around you are ready to really focus in on your financial situation. Using December as a practice run allows students to have some experience at the beginning of the year, instead of being new to the budgeting process.  This experience gives students a chance to start planning ahead for the upcoming semester, school expenses, or the opportunity to begin saving for spring break.

Speaking of spring break or education expenses, goals are a vital piece of creating a budget.  The end of one year and beginning of the next is a great time to set some new financial goals.  There are short-term and long-term goals.  A short-term goal is something that you want to achieve within the next year and a long-term goal is something you want to achieve in longer than a year.  If you had goals from the previous year, be sure to address the process of them.  It is especially vital to review any previous long-term goals you had set.  It is really important to make sure that any goal you want to achieve is a SMART goal.  SMART goals stand for specific, measurable, attainable, realistic, and timely.  For example, if you were saving for a new car a smart goal to achieve that could be: “I would like to purchase a new car by December 2018 for $10,000 by saving $188 a month.”

Making financial decisions can be difficult for many college students who are managing their money for the first time in their life.  If you are feeling financially stressed, feel free to reach out and get help. A great resource for students at Kansas State University is a free individual counseling session with our peer counselors and Salt.  Salt is the free online financial tool Powercat Financial Counseling bought for students and alumni that offers numerous financial articles, tools, and many other resources.  A recommendation that is helpful when making good financial decisions is to find out what motivates you to make those decisions.  Do you have a goal in mind when you make positive financial decisions or is it the feeling of achievement you feel?  Either way, use that motivation to continue to find success in your financial situation.  If you are unsure of what motivates you, try to really think about the reason behind the financial decisions you want to make.

Lastly, as the new year begins make saving a priority.  A beneficial habit for students to establish is to pay themselves first.  If you try to make it a priority to save a little bit of money each and every month before spending more the financial goals you set will start to become a reality.  If you aren’t sure where or how to start savings, start small. Instead of spending $2 a week at the vending machine, try saving that and at the end of the year if you saved that $2 every week you would have a total of $104 of just vending machine money each year!

Although this can be a stressful time of the year with a lot of extra expenses, just remember to take a deep breath and plan ahead.  The new year is always a great time to regroup and form positive financial habits.  If you make a financial resolution, try to stick with it and the hard work will pay off.  Powercat Financial Counseling is here to assist you in making these steps as well.

Kristen Payne
Peer Counselor I
Powercat Financial Counseling
www.k-state.edu/pfc

Lose Excess Spending:  Financial Fasts and Financial Diets

Ever get to the end of the month and wonder where your money went?  Being in college offers not only the opportunity to become financially independent, but it also brings opportunities to squander your money away.  In our society, many social events are centered around eating and this holds true on campus as well.  However, spending money on eating out can be just as unhealthy as the food you get when eating out.  Two ways to begin exhibiting better money habits are by going on a financial fast or starting a financial diet.  Both require you to differentiate between needs and wants and can help you begin to understand what to spend money on and when it may be better off saving.

Financial Fast

A financial fast is a shorter but more intense way to kick-start better money habits.  The financial fast lasts 21 days and limits your spending to only the bare essentials to living.  Items considered essentials include bills (i.e. rent, utilities, etc…), gas to get to and from school or work, groceries meant to sustain your body (i.e. not chips or soda), and medications.  This list will be different for everyone and requires you be realistic about what is a need.  The financial fast also entails spending only in cash and recording every transaction as it’s made, justifying the need.  You can use a checkbook or debit card register, a notebook, an excel sheet, or apps such as www.Mint.com to record your transactions.  Recording your transactions helps keep you accountable to the fast as well as gets you to think about your needs and wants.  A financial fast can be beneficial to do before beginning a financial diet because it immerses you more into learning what areas are and aren’t flexible.

Financial Diet

A financial diet, on the other hand, is more prolonged and allows you to be creative with your spending.  First, know what is a need and what is a want.  From there, brainstorm ways to reduce or eliminate your spending in certain categories.  Don’t be afraid to get creative.  Use what you already have and look for DIY projects.  Similar to the financial fast, spending in cash and recording your transactions can provide you even more awareness and accountability of your spending.  Below is a non-exhaustive list of examples in which you can cut spending sorted by category.

Food

  • Limit the number of times you eat out (i.e. once a week)
  • Prepare meals at home
  • Bring your lunch (and any snacks you’ll need throughout the day)
  • Split entrées when you go out to eat (make sure to know what extra charge may be assessed for doing so)
  • Ask if the restaurant does half-orders
  • Sign up for coupons at places you frequently eat

Entertainment

  • Check out books or movies from the school or public library
  • Drink with friends at home rather than spending money in Aggieville
  • Utilize services such as RedBox or Netflix instead of going to the movies
  • Invite friends to go to the park or have a game night at home

Transportation

  • Walk or ride your bike
  • Carpool
  • Stay on campus between classes instead of driving back home and back to campus again
  • Use the ATA Bus

If you don’t succeed at first, that’s okay.  It’s not easy to change your lifestyle right away and like other diets, it takes time as well as requires you to tweak it until it fits for you.  Consider finding a friend to participate with you and hold each other accountable.  Once you find success, think about what to do with your extra money.  You can use it to pay down debt, save up for emergencies or upcoming trips, or even think about investing it.  The first step though is to be healthier and lose the excess spending.  Check out our Twitter in the coming month to read more tips on saving money.

Sources:

Christyne Stephenson
Peer Counselor III
Powercat Financial Counseling
www.k-state.edu/pfc