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Author: Cheryl Rauh

How to Budget for the Summer

Posted on by Cheryl Rauh

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/

What are employee benefits?

Posted on by Cheryl Rauh

Employee Benefits are any kind of tangible or intangible compensation given to employees apart from base wages or base salaries. Two of the foundational benefits are health and wellness benefits and retirement benefits.

What are possible health and wellness benefits?

Health and wellness benefits include healthcare insurance, dental insurance, vision insurance, life insurance, disability insurance, prescription drug coverage, employee assistance programs, and wellness programs.

What definitions do you need to understand my benefits?

Premium: The monthly cost of an insurance plan is called its premium. This cost is often partially paid by the employer with the remaining cost falling on you, the employee.

Deductible: When an insurance claim/incident (typically medical) occurs, the deductible is the amount you have to pay out-of-pocket first before your insurance starts paying your claims.

Copay: A copayment is a fixed cost attached to specific services for your healthcare. When you pay a co-pay for your service, the remaining cost will either be covered by your health insurance or split between you and the healthcare based on the co-insurance amount. An example of a copay would be a $40 flat charge for every general care appointment from your Primary Care Physician.

Coinsurance: Co-Insurance is a percentage attached to medical costs that identifies how much you pay of the medical expenses after your deductible has been paid.

Example: You have a 20/80 coinsurance indicating 20% is your cost. If you have $100 in expenses and your deductible has been paid, you will owe $20 (20% of $100). It is important to note that some plans may list the same benefit as 80/20 (reversing the numbers), so it is always important to identify which portion you are responsible for.

Out-of-Pocket Maximum: Your out-of-pocket maximum on your health insurance policy is the maximum amount of money that you will have to pay in total for the year, excluding premiums and balance bill charges.

Example: Imagine you have a $1,000 deductible, 20/80 co-insurance, an out-of-pocket maximum of $10,000 and a large medical expense of $50,000. In this example you would pay $1,000 deductible first [50,000-1,000=49,000], then 20% of the remaining costs up to 10,000 maximum [49,000*.2=9,800], but because you already paid $1,000 of your $10,000 maximum you only have to pay [10,000-1,000=9,000] 9,000 of the remaining $9,800 expenses.

Network: Your healthcare network includes all the facilities, providers, and suppliers your health insurer has contracted with to provide health care. Most plan will still cover out-of-network health care, but they will cover a smaller portion, so your expenses will be much higher.

Primary Care Physician: Your primary care physician will be your go-to for general care and your source for referrals to additional medical care. When reviewing your benefits, your primary care physical will often be referred to as your PCP. 

What are possible retirement employee benefits?

There are two basic categories of retirement plans:

  1. Defined Benefit Plans: A defined benefit provides a specified retirement income based on years of service and related salary.
  2. Defined Contribution Plans: A defined contribution plan allows you, the employee, to contribute up to a maximum amount of money each month that is saved and invested to be accessible funds for you at retirement.

Various types of retirement plans exist based on the type of employer you have, but all the defined contribution plans work similarly. The defined contribution plan options will either be a 401(k), 403(b), or a 457. A pension plan is a defined benefit retirement plan.

  • 401(K) Retirement Plan: Define contribution plan used by for-profit organizations
  • 403(b) Retirement Plan: Defined contribution plan used by tax-exempt organization (e.g. public schools, churches)
  • 457 Retirement Plan: Defined contribution plan used by nonprofit and government organizations
  • Pension Retirement Plan: Defined benefit plan. Social Security is a defined as a pension plan.

What is a % contribution match on my defined contribution retirement plan?

An employer-sponsored match on your defined contribution (e.g. 401(k)) retirement plan means that your employer will equally contribute the same amount of money that you contribute, up to a certain percentage of your income, often between 3-5%.

For example, let’s say Tristan makes $40,000 a year and Tristan’s employer provides a 4% match. If Tristan chooses to save 8% of their income, [$40,000*8% = $3,200] then their employer will also contribute up to 4% to Tristan’s retirement plan. Since Tristan chose to saved 8% then the employer will contribute the full match of 4% [$40,000*4% = $1,600].

How can Powercat Financial help you with employer benefits?

Powercat Financial is a free, confidential peer financial counseling service for K-State students. At Powercat Financial, we work together with students to explore and discuss topics like credit, student loan repayment, budgeting, and job offerings. Employee benefits are a major factor to any job offer as well as your financial well-being and as such it is important to understand what you’re being offered and how to benefit from these employer-sponsored benefits. I’d encourage K-State students looking to review a job offer and benefit package to schedule a free appointment to have one of our counselors guide you through your employee benefits!

Chet Redstone
Peer Counselor I
Powercat Financial
www.k-state.edu/powercatfinancial

Graduation budgeting for a new cost-of-living

Posted on by Cheryl Rauh

 

Seniors, are you starting to feel a sense of financial stress or uncertainty when it comes to the cost of living in the new area you are moving to? This stress can occur from moving from an apartment to a house, transportation costs in a new area, or maybe even the cost of groceries in that area. These factors can be calculated and budgeted out to ensure that the financial stress and uncertainty you may experience can be minimized if not eliminated with two simple steps!

Step 1: Start by using a cost of living calculators such as Nerd Wallet’s cost of living calculator or Bankrate’s cost of living comparison calculator to estimate the cost of living in that certain geographic area. This could be especially useful to use when graduating from college and moving to a new city or when you are looking at job offers and want to know if it would be an acceptable offer based on the cost of living in that area.

Step 2: Once you have utilized a cost-of-living calculator to get that estimated amount that you will need to make to maintain your lifestyle in your new city, BUDGET & PLAN! Your next step requires you to take a step back and create a budget or tweak your existing budget to account for the changes in different categories based on the price. Creating a budget for this change can lead to lower stress levels when it comes time to move because you will have a plan in place. Budgeting also requires you to create a habit by being disciplined and holding yourself accountable to this budget.

Below are three cities and current common expenses taken from the NerdWallet Cost-of-Living Calculator.

Manhattan, KS

  • 2-bedroom apartment: $944
  • Gallon of Milk: $2.11
  • Gallon of Gas: $3.30
  • Movie ticket: $13.75
  • Cost of a doctor visit: $135.63

Phoenix, AR

  • 1-bedroom apartment: $1,996
  • Gallon of Milk: $1.93
  • Gallon of Gas: $3.82
  • Movie ticket: $9.87
  • Cost of a doctor visit: $99

Baltimore, MD

  • 1-bedroom apartment: $1,823
  • Gallon of Milk: $2.41
  • Gallon of Gas: $3.30
  • Movie ticket: $13.41
  • Cost of a doctor visit: $83.42

Looking at these three locations and the different costs associated with each, we see that a budget can help you understand and anticipate expenses so that you know what lifestyle to expect. Don’t just look at one big expense, like housing, breakdown the overall expenses associated with living in your new location to have an effective plan. Little costs (or savings) add up.

Remember – no matter the circumstance, it is never too late to create a financial plan to set yourself up for success!

Don’t hesitate to stop by Powercat Financial to get help starting this budget now! Powercat Financial is here to help assist with any financial topic and concern you may have! We offer free and confidential peer-to-peer counseling sessions in person or via Zoom at your convenience. Not only can we talk about budgeting, but we can go over other topics such as student loans, credit, or savings as well. Appointments can be made online.

Halle Schindler
Peer Counselor I
Powercat Financial
www.k-state.edu/powercatfinancial 

Reviewing Offer Letters, How to Pick?

Posted on by Cheryl Rauh

Congratulations on your offers! You have now completed an important step in your professional journey. Whether this is for an internship, part-time, or full-time job, it is important to consider a variety of factors when choosing just one.

Salary

Obviously, salary is the main consideration when reviewing your potential offers. Internships and part-time work will usually be shown at an hourly rate, while full-time occupations will provide a yearly salary. Instead of automatically gravitating towards which offer is the highest, consider other forms of payment you will receive from your job:

  • Commission: A job in sales often includes forms of commission payments to you, the seller. Whatever inventory you take part in helping sell, you can receive a percentage of the profits.
  • Bonuses: These are payments to you on top of your yearly salary. Often bonuses will be based off of your performance in your field and work as an incentive to be the best employee you can be.
  • Benefits: Perks including health insurance, vacation days, and retirement are all important factors that play into your salary without being explicitly shown. Be sure to calculate your yearly benefits and consider how important each one is to you.

The below chart shows a comparison of job options for an individual. See how different benefits can affect the overall value of the offer? While the middle offer has the highest dollar value at the end, there is significantly less leave time than the other positions. Those extra dollars are earned with less time away. At the same time, the leave time has no value unless you use it.

Job Responsibilities

Even if you aim to be in a niche field of work, this is still an important aspect that requires contemplation. Reviewing the job description each company provides you is a great way to learn what their needs are in an employee. Be sure to ensure that this description aligns with your skillset and career goals. Ask your employer if you have any questions about what your day-to-day tasks will look like as well as opportunities for growth and advancement within the company.

Location

Location, location, location is a saying for a reason. Your job may bring you to a new city that brings important cost considerations along with it:

  • Cost of living: NerdWallet is a great resource for students to utilize, and compares equivalent salaries between cities (found here: https://www.nerdwallet.com/cost-of-living-calculator). Monthly costs like rent, groceries, and transportation vary from place to place so your living may look different even on a similar salary.
  • Commute time: How much time will you spend getting to and from work every day? How will you get there? How much will this cost on a daily basis? All of these questions are important to think about when choosing a position. These hidden costs can quickly add up over a year and can eat into your salary.

Company Reputation & Culture

A job takes up a significant portion of your lifetime, so it is vital to make sure this is a place where you feel comfortable and fulfilled. Company reputation can be researched by reviewing the history of the business, their mission statement, and any other reviews from current and former employees and customers. You will be associating your name with this company, so it is important to be proud of who you work for.

Finding a company’s culture may be more challenging than researching their reputation. Determining if the business’ values align with your own is found through your interview process and asking lots of questions. Factors including work-life balance, diversity, and employee engagement are all things to keep an eye out for in this process.

Powercat Can Help

You now have a better idea of how to choose between your potential job offers. Although this is a great general guideline to consider, each decision you face will be unique to you and requires a detailed approach. Here at Powercat Financial, we can walk you through the steps of this process and much more. Schedule a free and confidential appointment today at https://www.k-state.edu/powercatfinancial/ and take the next step in your professional journey!

Xander Say
Peer Counselor I
Powercat Financial
www.k-state.edu/powercatfinancial

Planning for your Post-Graduation Life

Posted on by Cheryl Rauh

Graduation is right around the corner!

Whether you are a freshman just beginning your academic career at K-State or a senior finishing up those last classes before May, thinking about starting your career, moving to the city of your dreams, or all the people you can meet while out in the world can be thrilling. However, have you thought about the details of what your future might look like? How your expenses may change with college life behind you? How your earnings could change with your new degree, or what your budget might look like after graduation? Planning ahead and answering these questions can be crucial when jumping into the world outside of college. This blog post covers some of these concerns and provides resources for further exploration.

 Step 1: determine a realistic starting salary

Before graduating from college and entering the workforce, students apply for all of the jobs that align with their passions in cities or towns that they feel comfortable with living in. One aspect that some students struggle with is knowing what might be a realistic salary for a starting position in their field. A 2022 survey found that most students over-estimate their starting salary by tens of thousands of dollars. This can result in disorientation and stress from that over-estimation.

Screenshot of the post-graduation salary information dashboard.

In order to avoid this, you need to set a realistic sense of your future entry-level salary and the cost of living. There’s good news though! There are tools to help. One of the tools available is the Career Center’s Post-Graduation Statistics, which includes a salary dashboard. This dashboard provides basic statistics collected on entry-level salaries organized by major.

When you use this tool, pay attention to how many reported salaries were used to create the averages. Some majors have very few submissions which can skew the data. If you look up your major and you find it has 20 or less, look for additional salary info through an alternate resource. Want to make sure this tool is accurate for future K-Staters? Report Your Job on the K-State Career Center website!

Other resources you can use to determine possible salary include careeronestop.org, myplan.com, salary.com, or the salary calculator found through jobsearchintelligence.com, which allows you to filter by location and years of experience.

Step 2: calculate the cost of your living expectations

Great job taking the first step for your future financial well-being! The second step that you need to take to prepare for the creation of a post-graduation budget is to figure out where you may want to live in the future and research the cost of living in that area. With this cost-of-living calculator from NerdWallet you are able to take where you currently live and contrast it with where you would like to live in the future.

Screenshot of the NerdWallet cost-of-living calculator tool.

This calculator will help you be more mindful with your budget. A salary of $100,000 could get you far here in Manhattan, Kansas but maybe not so far in New York City, where costs are much higher. Being able to note this difference is the crucial second step in setting a realistic expectation for your future self and setting yourself up for that healthy post-graduation budget.

Step 3: Create a post-graduation budget

Graduation and life after college can cause dynamic shifts in life. Whether it be moving to an entirely new city or having to get used to a whole new schedule, the transition from college life to work life can be huge! The last and final step of prioritizing your future financial well-being and planning for post-graduation is to anticipate likely changes and create of your post-graduation budget.

Another tool provided by Powercat Financial that is helpful with this goal is our Monthly Student Loan Debt Service Calculation sheet. It’s a short sheet that’s easy to fill out and covers the basic expenses such as rent, student loan repayment, and food. Input the salary you’ve been offered or the average starting salary you determined in step one. Then fill in realistic expenses for what you would think your future might look like. Start with familiar expenses like rent and food, then add in things you may never have covered before.

Screenshot of a monthly student loan debt service calculation spreadsheet.

One tricky thing to add is the current expenses that have been covered by a parent or guardian that you may take on when you graduate. Some of these expenses could include streaming services like Netflix, cleaning supplies for the apartment, car insurance, and health benefits. It’s best to brainstorm all of the potential expenses you might have that aren’t a part of the sheet above and add them. Do you want to get a pet? Will you need to travel home for holidays? Lots of your expenses may change. The more detail included in the budget the better!

Step 4: Enjoy life and adjust plans as necessary

Once you have completed step 3, you’ve set a foundation for your future financial well-being. The neat thing is, after you have graduated and can determine real numbers for these expenses, you’ll be able to update the spreadsheet, and your budget will adjust automatically. As more of these real numbers get added, the more attuned your budget will become to your life. Overall managing your expectations and creating a post-graduation budget can not only make life easier, but it can also help avoid lots of needless stress by helping you plan ahead!

Need help mapping your future budget?

If you would like to have some guidance or a peer to help as you draft your budget, Powercat Financial is here for you! We are a free service where your fellow students help with whatever financial questions you may have. Whether it be budgeting or maybe helping you calculate the amount of student loans you need, we would love to help. Our goal is to facilitate the financial well-being of each and every Kansas State University student. Schedule with us today through Navigate!

Jackson Harvey
Peer Counselor I
Powercat Financial
www.k-state.edu/powercatfinancial

Junk Fees: The Hidden Cost of Consumerism

Posted on by Cheryl Rauh

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