Kansas State University

Many students find that there are always many large purchases that need to be budgeted for at the same time. That could be an upcoming trip, saving for holiday gifts, a new laptop, saving for your rent or maybe even a down payment on a home. Whatever the upcoming event or need that you are saving for, it is always good to create a simple strategy to ensure that all your needs and want are budgeted for! Follow this step by step guide to create great budgeting strategies and reach your goals.

1. Organize each category with relevant information:

The best way to organize each budgeting category is to sit down and start thinking about any large/upcoming purchases or saving needs you have. Create a list with different categories and within each category write down any important and relevant information about that goal. This could be details about when you need the money by, how much money you need, if there is any payment plans or divided payments you can make on that goal, etc. Once you have listed all important information, it is time to prioritize.

Example: In this example, the student wants to save for 3 different goals, and they listed the relevant information below.

Trip to Europe: They need the money by summer 2023, total needed $4,000 in 14 months.

Investing: They want to open their Roth IRA account in 2023 and want to make the maximum contribution of $6,000 in December of 2023, which would be 20 months from now.

School Tuition: They need to cover their last semester of tuition, which is spring of 2023, the total will be $4,000 and they need it in 8 months.

2. Prioritize which categories are most important:

After you have taken the time or organize your goals, it is time to prioritize which ones are most important. While of course it is best to try and accomplish all your goals, make sure that you understand if money is short and you cannot contribute to every goal, you know which ones are the most important and timely.

Example: After the student has listed their 3 goals, they listed the goals in order of most to least important. Keep in mind that this can be personal preference and may not be the same for everyone.

Most important: School Tuition – They know they need to finish college first and foremost so this goal will come first.

Second most important: Trip to Europe – They have already planned many of the details and other friends are counting on them to go, they know that this must be a saving priority for them.

Third most important: Investing – Although they know they need to start investing soon, this ranks third because of the two other financial obligations they have.

3. Set a month-by-month plan to save the desired amount each month:

After you have listed each goal in order of importance, it is time to start saving and budgeting for each goal. To do this, take the total amount you need to save for this goal and divide it by the number of months you have left to save. After you have come up with your monthly number to save, start thinking about how you will achieve these goals.

Example:

School Tuition: $4,000/8 months is $500 per month starting in May 2022

Trip to Europe: $4,000/14 months is $285 per month starting in May 2022

Investing: $6,000/20 months is $300 per month starting in May 2022

This means for the rest of 2022, they need to save $1,085 per month for all 3 goals than once their school tuition is paid for, they will only need to save $585 in 2023.

4. Adjust as needed:

If you come up with a number that is too large to save for you can either reduce your number of goals, add more time to save for each goal, or reduce the amount of money needed to save. If you cannot do any of those options, start looking into how many extra hours you may need to work each month to save for those goals. To create extra income, you could look towards side hustles like babysitting, selling clothes you no longer wear, or picking up an extra job for the weekends. Continue to revisit these goals and evaluate if you are on the right track to accomplish your goal!

Example: The student realized they only have $900 to save each month and will come up $185 short. The student decides to pick up 1 babysitting job each week to cover these extra saving expenses and is able to meet their goal.

5. Continue to set new goals: Once you have reached your goal, celebrate yourself and think of other upcoming goals you may want to add now that one has been completed. Always make sure your goals are SMART, by creating specific and reasonable goals, this will help to not feel overwhelmed by them.

Whatever your goals are know that budgeting is one of the best way to create healthy financial habits to know how your money is coming in and where it is going. By creating healthy budgeting habits early on, you will be prepared for larger purchases later in life.

Cameron Jones

Peer Counselor II

Power Financial

302 K-State Student Union, Third Floor

918 N. 17^th Street

Manhattan, KS 66506-2800

785.532.2889

www.k-state.edu/powercatfinancial

PowercatFinancial@k-state.edu

Two years ago, the U.S. government put a pause on student loan payments and interest accrual as a COVID relief measure with the Care Act 2020. The pause was to end on May 1 giving borrowers less than a month to prepare, however today the Department of Education announced the pause will be extended to August 31, 2022.

What should you expect when payments and interest resume September 1st?

Here are 6 steps to make sure you’re equipped for student loan payments to resume:

1. Changes to your contact information

Begin by logging on your loan servicer’s website and in your StudentAid.gov profile to review your contact information and make any necessary changes that may have taken place in the past 2 years.

2. Get the figures on your next payment

While on your loan servicer’s website, check your auto-debt enrollment or sign up for the first time. When the pause ends, you will receive a statement from your servicer. This will inform you of the date your payment is due, the interest, and payment amount. Your payment will be due no sooner than 21 days from the time they send you this statement.

3. Budget

Prepare a budget to determine how much you can afford in payments. Provided by Powercat Financial are budgeting tools to help identify your expenses and create a spending plan. This will help direct you in the next step, reviewing repayment plans. See https://www.k-state.edu/powercatfinancial/budgeting/ for a spending plan worksheet.

4. Repayment Plan Options

Examine repayment plans to see what works best for you, your budget, your goals, and your needs. You can do this by reviewing StudentAid.gov/loan-simulator/ to review plans. Many people’s situations have changed over the last 2 years, so this is the best way to find what fits best for you. Even if you change your repayment plan, you can go back and change it again later if needed via your loan servicer.

5. Short-Term Relief

If you can’t find a repayment plan that works for you, as a last option, contact your loan servicer to ask for short-term relief or see if you can qualify for an income-based repayment plan. Before making this request, check the loan simulator to see how it could affect your repayment.

6. What if you don’t make your payment?

Understand what happens if you don’t repay your loan. If your loan payment is not paid for 90 days or more, your loan servicer will report the delinquency to the three major national credit bureaus. Delinquency will affect your credit score, making it harder to get credit. After 270 days, your delinquent loan goes into default.

7. Do you know who your loan servicer is?

Your loan servicer is the company that handles the services on your loans, like the billing. You will need to know the servicer in order to go to their website and make payments, change your repayment plan, and other tasks related to your loans.

8. Follow these steps to find your loan servicer:

• Log in and visit your dashboard on StudentAid.gov
• Find the section labeled “My Aid”
• Select “View loan servicer details”

You can keep current on news related to the status of federal student loan repayment via https://studentaid.gov/announcements-events/covid-19 in the event the pause is extended again.

Powercat Financial is a FREE, confidential financial counseling appointment with a peer financial counselor resource for all currently enrolled K-State students. If you have any additional questions about these areas, or if you have other financial questions, schedule a time to meet with us to create a budget, go over repayment plans, and help you get set up with your loan servicer.

Sami Thompson

Peer Financial Counselor

Powercat Financial

www.k-state.edu/powercatfinancial

Why Should I Budget?

Budgeting can seem daunting at first but once you realize the benefits you will appreciate it significantly. If you are reading this and wondering if you need a budget ask yourself the following questions. Do I know where all of my money is going in a given month? Am I progressing towards my financial goals? Am I stressed or uneasy about my finances? If you don’t know the answer to any of these questions, then budgeting is for you! There are many different ways budgeting can benefit you, some of which you might not have thought of. This blog post will cover three ways basic budgeting can help.

How to Budget:

Before learning the benefits you need to learn how to budget. There are three basic steps:

1. Start by using Powercat Financial’s spending plan worksheet. The first column on the left is the estimates column; this is where you put in how much you think you are spending just off the top of your head. Start at the top of the sheet and work down each row filling in values as is applicable.
2. After you have completed the estimates column, it is time to start working on the actuals column. Here you will need your bank and credit card statements or receipts to fill in the actual amount you are spending for each line item in the budget. This might be a reality check if this is the first time you have done this.
3. Finally, create a spending plan for the next month. Using the data you have collected in your actuals column you can set spending limits and forecast expenses for the next month in the next month column. Voila, you now have a budget or spending plan created for the next month. All you have to do now is stick to it!
4. If you find that you are coming up short at the end of the month (negative balance at the bottom), then you can use the need or want columns. These columns are helpful for determining where you can potentially cut back on spending. A need is something you absolutely require for survival. On the other hand, a want is a non-essential item in your budget.

Bountiful Benefits!

Now on to the benefits of budgeting. First, budgeting helps you identify “spending leaks”. A spending leak is an area in your budget where you are spending more than you realize. For example, you might think you are only spending $15 a month on coffee. However after you create a budget, you then realize that you are actually spending closer to $50 a month on coffee. Now that you are in the know, you can set your spending where you would like it to be.

Second, budgeting allows you to plan a path to your financial goals. What is a financial goal? It is a money target that, when hit, will bring you closer to the lifestyle or experience you are working toward. For example, your financial goal might be to buy a house within the next five years. Another might be, paying off your student loans early. Budgeting will allow you to allocate funds to specifically work towards whatever financial goal you have set. Creating and keeping a budget will also help you track your progress to said goals.

Last but not least, budgeting can help reduce stress related to personal finances. By budgeting you remove scenarios where you are at the store wondering if you can afford something. Using the spending plan mentioned above, you can dictate specifically where you want each dollar to go. This will help you decide what you can and cannot afford. In addition, it might also help you find money you didn’t know you had. Budgeting removes the guess work to personal finance and helps you understand the exact impact of each purchase on your financial wellbeing.

Need Help?

Powercat Financial is here to help when it comes to creating personal budgets. We would love to meet with you to talk about the details of budgeting as well as walk you through the entire process. Appointments are free and confidential for all K-State students. You can schedule an appointment on our website here: Powercat Financial. You can also find the spending plan worksheet on our budgeting page here: Powercat Financial Budgeting. In addition to budgeting Powercat Financial can help with anything from understanding student loans to evaluating job offers.

Upcoming Event: Powercat Financial will host an interactive game of life simulation along with Meritrust Credit Union on April 6th from 12:00-1:30pm in the Union Courtyard. Come experience a “real-world” game of Life based on day-to-day financial decisions and learn how to manage your money!

Abram Mugler

Peer Counselor I

Powercat Financial

302 K-State Student Union, Third Floor

918 N. 17th Street

Manhattan, KS 66506-2800

785.532.2889

www.k-state.edu/powercatfinancial

PowercatFinancial@k-state.edu

The First Step in Your Summer Break Journey.

Budgeting can be the first step you need to start your adventure. Whether you are saving for a summer trip or need some help throughout the year, budgeting can be a powerful tool to use. Budgeting is the process of creating a plan to spend your money. This spending plan is called a budget. Creating this spending plan allows you to determine in advance whether you will have enough money to do the things you need to do or would like to do. The counselors at Powercat Financial are here to make this first step stress free for you.

We have multiple resources to ease this process on our website at https://www.k-state.edu/powercatfinancial/. While you can do it yourself, we would love for you to schedule an appointment to let us help you. We have a Microsoft Excel spreadsheet that you can start with to get an estimate of what your income and expenses may be. It can be found by clicking on this link https://www.k-state.edu/powercatfinancial/budgeting/ and clicking on the spending plan worksheet. If you decide you want to use this spending plan worksheet to create your budget, here are three easy steps to follow:

1. First you will estimate what you believe your income and expenses are for a monthly period. You will also identify whether the expense is a need or a want.
2. Second you will record your actual income and expenses as determined from your financial records for a monthly period again identifying them as needs or wants. By estimating first, then recording actuals second, you will get a good feel for how in tune you are with your spending habits.
3. The final step is to determine any adjustments that need to be made and to create the spending plan for next month.

There are other options you can use to budget as well. A popular free app that you can use on your phone, or any electronic device is “Mint”. Mint brings together your spending and income automatically for you. All you must do is link a bank account to your new account, enter your budget plan and let Mint do the work for you. It can be set up to send you alerts to remind you of your spending plan goals and current status.

Okay I Have Created a Budget, Now What?

The next step in your summer break adventure is planning your trip. Planning your trip can be an exciting part of your trip. While it can be an exciting aspect it can also be a stressful one. I can surely say I have traveled quite often in my twenty-three years and here are some travel tips I would love to share with you.

• Fly on an Off-Peak Day or Time – Traveling on a Monday or Tuesday versus a Thursday or Friday can give you better deals on your flights
• Expand Your Hotel Horizons – What I mean by this is you do not necessarily need to stay in a hotel on your trip. There are plenty of popular booking websites you can use including Airbnb, Flipkey, and Homestay.
• Open a Travel-Friendly Bank Account – While this may seem like an odd tip, it can be useful when traveling outside of the United States. Having a bank account that does not charge ATM withdrawal fees can aid you in saving money. It is common for banks to charge up to 3% of your withdrawal in fees.
• Compare the Prices of Websites – While it may be tempting to select the first price you see, comparing prices can help you save hundreds of dollars. In my experience of traveling, I created a Microsoft Excel spreadsheet comparing different prices and websites to help me find the best deal.

Additional tips and tricks can be found on https://www.businessinsider.com/travel-budget-save-money-on-vacation-2019-10#be-flexible-with-your-travel-dates-3. If you or your friends need help in this process, we are here to help! Powercat Financial can help you create your budget. We offer free and confidential appointments in-person or by zoom as well. Appointments can be requested at https://www.k-state.edu/powercatfinancial/.

Upcoming Event: Powercat Financial will host an interactive game of life simulation along with Meritrust Credit Union on April 6^th from 12:00-1:30pm in the Union Courtyard. Come experience a “real-world” game of Life based on day-to-day financial decisions and learn how to manage your money!

Dylan Birkinsha

Peer Counselor I

Powercat Financial

www.k-state.edu/powercatfinancial

Many students are responsible responsible for helping pay for their own college education which can be daunting. You begin looking at tuition rates and start to wonder how you are going to be able to pay for all of this. Then you remember your advisor telling you to fill out the FAFSA, but you truly have no idea what that is or why you need to fill out yet another form. You also are starting to wonder once you fill the FAFSA out, what happens next? If I get offered multiple loans, which ones should I accept? How do I even accept them? I know there are a lot of questions running through your head at this time, but we are here to help and answer all of your questions here at Powercat Financial. Just follow these three simple steps:

1. Fill out your FAFSA information ASAP:

FAFSA stands for “Free Application for Federal Student Aid”. The college you are attending will use this information to determine your federal aid eligibility. The amount of federal aid you receive is based on many factors such as your expected family contribution, year in school, enrollment status and the cost of attendance at the school you will be attending. This federal aid can come in many different forms such as grants, subsidized loans and unsubsidized loans. We will go over these in more detail here shortly, but for now, we’re going to focus on filling out your FAFSA. First of all, you need to go to www.studentaid.gov/fafsa to start the application process. I would advise sitting down with your parents or a trusted adult to help aid you through this process. It will first ask you three questions: If you are a student, if you are a parent filling out the form on behalf of the student or if you are a preparer helping a student fill out the form. Select whichever applies to you. If you have not created an account through studentaid.gov already, you will be required to do so at this time. You will then go through 6 different categories filling out information that pertains to you and your parents. These categories include things such as your demographics, school selection, dependency status, parent’s demographics, as well as you and your parent’s financials. This can be a lengthy process, but it is very important to do in order to be eligible to receive federal aid. Once you are finished filling out all of this information it is then processed by the US Department of Education and is sent to the schools you selected within the FAFSA. This can take anywhere from 3 days to 3 weeks, so be patient! You will also receive a Student Aid Report (SAR) typically within two weeks of filling out your FAFSA. Once the school has received your information they will then determine how much financial aid you are eligible to receive and prepare a financial aid award letter that will be sent to you or posted within the student information system (KSIS). This can vary from school to school but will usually arrive shortly after you have received your acceptance letter from them. Finally, you have received the federal aid that has been offered to you, now what? There are probably many different types of aid that you have been offered and this is where we move into step #2.

2. What aid should I accept? Difference between a subsidized and unsubsidized loan?

This is the step of the process where many questions arise. If you are a student at or plan on attending Kansas State it would be a great idea to schedule an appointment with us at Powercat Financial so we can go over your financial aid with you in detail. The first and most important thing is to see if you have been offered any grants. Grants are FREE MONEY that the government gives you if you have demonstrated a need for financial aid. Free money is always the best, so make sure you accept any grants that are offered to you!

Next, you might see that you have been offered a “direct subsidized loan” or a “direct unsubsidized loan.” What is the difference in these two loans and which one should you accept first? The Direct Subsidized Loan is offered to students who demonstrate financial need. The federal government will pay the interest that grows on your subsidized loans while you are in college, so it does not accrue on your principal amount. A direct unsubsidized loan is offered to students and is NOT based on financial need, therefore almost everyone who applies for the FAFSA will be offered some amount of an unsubsidized loan. Unlike a subsidized loan, with the unsubsidized loan, the interest on your loan will grow and add on to your existing loan amount. An important thing to note is that all federal loans are currently on hold due to Covid, and no interest is being charged on any loans until May 1st, 2022. However, starting May 1st, 2022, your unsubsidized loans will start accruing interest.

So based on that information can you guess which loan you should accept first? Hopefully, you’ve figured out that the subsidized loan is a better option than the unsubsidized loan because it grows interest-free while you are in college. Both of these loans have a six-month “grace period”, which means once you graduate you have six months until you have to start making payments towards them. Also, after those six months have ended you will have to start paying the interest on your subsidized loans instead of the federal government paying it. You may also find out that you are eligible for federal work-study. Federal work-study provides part-time jobs for students with financial need, which allows them to earn money to help pay for their education. Kansas State participates in the federal work-study program. Being federal work-study eligible can be a very attractive asset to you and is important to tell employers when applying for jobs. This means that the employer isn’t paying all of your wag as the federal government is helping pay a portion of your wage. Which makes it easier for you to obtain a job from them. Also, you do not report work-study income on the following year’s FAFSA unlike other work income. Many on-campus jobs at Kansas State are eligible for work-study. To recap this section, accept financial aid in this order 1) Free money first! (grants/private scholarships) 2) earned money (work-study) and 3) borrowed money (remember to accept your subsidized loans first!).

3. Accepting your Federal Student Aid:

So how do you go about accepting your financial aid? Your student aid offer letter will include directions on accepting aid. Follow these directions carefully. Here at Kansas State, you can do this by going to k-state.edu and logging into KSIS then navigating to the Financial Aid tile. Here you will see all of the financial aid that has been awarded to you. This will include any private scholarships, federal grants and federal subsidized and unsubsidized loans. It is a very simple process after this. First, go through and accept all of your scholarships and grants. Next, an important thing to remember is that you do not have to accept the FULL loan amount. You can type in the amount of loan that you would like to accept for the full year, but remember this loan is for the full school year (or both semesters). If you are unsure how much to accept or which loans to accept, schedule an appointment with us at Powercat Financial as we can help assist you on how much you will need to accept!
Applying for and accepting federal student aid can seem like a daunting task, but I hope this blog has helped you understand it in a simpler way. If you have any other questions please reach out to us at Powercat Financial, we would love to assist you!

Kolby Stein

Peer Financial Counselor I

Powercat Financial

www.k-state.edu/powercatfinancial

powercatfinancial@ksu.edu

Becoming a millionaire may seem like quite an aspirational goal, but an attainable one in the future for most K-State students. No games, no gimmicks but a big dose of compounding. Compound growth that is, which simply means earning interest on top of interest.

Here is a quick example:

1. If you started with $500 and earned 9% annually, you would have $545
2. The second year, you start with $545 and earned 9% annually, you would have $594
3. The third year you start with $594 and earned 9% annually, you would have $647

Get the picture?

Can $50 a week get you to $1 million?

Compounding works best over long periods of time, but you don’t have to begin with a large amount of money. If you started as a student saving and investing as little as $50 a week ($2,600/year), that would grow to a million dollars over the next 40 years (assuming a 9% average annual return). The primary purpose of investing even small amounts early, is to build that saving and investing muscle and create the habit. Once you graduate and start working, your saving and investing will no doubt increase along with your income.

Even more powerful compound growth after graduation

Let’s turn to an example that looks at growing your money after you graduate and start your first job. According to the Bureau of Labor Statistics (bls.gov), the median U.S. income in 2020 was $67,860 for those with a bachelor’s degree and $98,436 for those with a master’s degree. Keep in mind that income amounts will vary widely based on your years of experience, field of study and geographic location. Many employers will even match your investing through an employer sponsored retirement plan, like a 401(k) or 403(b). A common employer contribution match is 6%, so we will use that in our example. Using a $60,000 income, here is what getting to a million dollars looks like when using the power of compound growth:

• $60,000 income after graduation
• You save and invest $9,000 (15% of your income)
• Your employer matches with $3,600 (6% of your income)
• Assuming a 9% return
• 24 years

The total value of your account after 24 years would be $1,054,631. Yes, you will have over a million dollars while you’re still in your forties! Do you think you could do it even sooner? Do you think it will take you longer? Or perhaps you think the rate of return should be higher or lower? Have a little fun trying different assumptions yourself, with this investment earnings calculator from Bankrate: https://www.bankrate.com/calculators/retirement/investment-goal-calculator.aspx.

Compound growth and the stock market

As you can see, this concept of compound growth is a powerful, passive way to grow your money through saving and investing. It can get complicated, but a simple way to start investing in the stock market, is through an index fund.  These funds are simply a basket of stocks or other investments that follow a particular index. An index fund can be in the form of mutual funds or exchange traded funds (ETFs); just remember that they are simply a basket of stocks or other investments and designed to spread your risk across many different investments.

One of the best gauges for the U.S. stock market is the S&P 500 index. The S&P 500 is the 500 largest and most widely held U.S. companies and include brands familiar to most of us like Apple, Amazon, Google, Chipotle, Starbucks, Nike and even Tesla. When you invest in an S&P 500 index fund, you are the proud owner of a piece of these companies, and the hundreds of others included in the index. Have a look at the current list of all the S&P 500 companies here: https://en.wikipedia.org/wiki/List_of_S%26P_500_companies.

The average return of the S&P 500 index over the past 20 years was 11% and you can find the most current returns on any investing app or website such as Google Finance (https://www.google.com/finance/quote/.INX:INDEXSP). Most major brokerage firms will offer an index fund that tracks the S&P 500 in addition to many other investments. Place where you can invest in the S&P 500 index via either a mutual fund or ETF include investment companies such as Vanguard or Fidelity, plus there are many others.

Learn more from Powercat Financial

Understanding the power of compound growth is just one of the many areas that can help you on your journey to financial success after college. Powercat Financial can help you with education around your personal finances through one-on-one counseling sessions or group presentations, via Zoom or in person. We can educate you on investment terminology and foundational knowledge, however we cannot give you specific investment advice. Appointment requests can be made by clicking on the purple buttons on the Powercat Financial website at www.ksu.edu/powercatfinancial. Don’t forget you can also stop in and ask a question without an appointment at our next scheduled “Pop-Up to Powercat Financial”, located on the Union 3rd floor in room 302 the first Friday each month (March 4, April 1, or May 6) from 9am to 4pm.

If you are a graduate student, be sure to join us for the upcoming “Grad Money Hour Series” in March and April, where investing and several other money topics will be discussed. You can get the details and register here: https://www.k-state.edu/grad/student-success/student-council/studentaffairs/

Jacqueline Koski

Peer Counselor I

Powercat Financial

www.k-state.edu/powercatfinancial

powercatfinancial@ksu.edu