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Setting Financial Goals

Posted on by christyne

April is Financial Literacy Month, and Powercat Financial Counseling is taking this opportunity to write a series of articles related to basic financial management.  To kick the month off, we’re starting with setting financial goals.

Planning Ahead

Setting goals, especially financial ones, can be a challenging, and sometimes daunting, task.  Having goals is important, though, in that they give you something to aim for and work towards.  To quote Zig Ziglar, “If you aim at nothing, you will hit it every time.” A good place to start is to think about your life in the future.  How do you want to live?  What do you want your life to look like?  Do you want to be debt free, buy a car and a house, start a family, or travel?  How will you accomplish these tasks and get to the life you really want?  Thinking about these things now is important.  When you graduate and enter the workforce, it is easy to get caught up in your daily routine and not give much thought to your future.  You will probably be inclined to think a few weeks or months ahead, but it might be hard to think a few years ahead.

Short-term vs. Long-term:

A short-term goal is one that is set for two years or less, and a long-term goal is one that is set for five or more years.  Some examples of short-term goals are planning for spring break and summer trips and building an emergency fund, while long-term goals might be buying a car, buying a house, or paying off student loans.  Even if you have trouble coming up with specific savings goals, you should still try to save whatever you can.  A good first goal for everyone, which should be a priority, is an emergency fund.  An emergency fund is a separate store of money which you access only in emergencies (ordering a pizza in the middle of the night because you don’t have food around is not an emergency).  If your car suddenly got a flat tire, how would you pay for it?  If you lost your job all of a sudden, where would the money come from to get you by until you get another job?  These are the types of situations in which an emergency fund would be useful.  It is recommended that you work up to having three to six months’ of living expenses saved up in the event you lose your job or are unable to work due to an injury.  This may seem like a lot of money, and depending on your situation, you as a college student could probably afford to wait a little while to get to the point of having this much saved.  Your parents may be willing to bail you out if something comes up.  But it is still a good idea to have at least $500 to $1,000 on hand in case of emergencies.  Life happens: will you be prepared when it does?

SMART Goals

When setting goals, it is important to define them well.  Your goals should be Specific, Measurable, Attainable, Relevant, and Timely, or “SMART.”  If your goal doesn’t have these characteristics, you will likely give up on it.  This is why it is important to write out your goals with these specifications and keep it somewhere where you will see it on a regular basis.  You will also want to prioritize them.  It is important to note that your goals may change over time and to review them periodically to make adjustments as necessary.  Set a reminder for yourself every few months to review your goals and see if you need to adjust them.  Maybe something came up since you set and prioritized your goals, or perhaps your goals will drastically change once you graduate; if so, you will want to make the necessary adjustments and re-prioritize.

Motivation to Save

Some people find saving to be difficult for them, whether it is because they feel like they are depriving themselves or they have loans to repay that they don’t think that they can save.  One way to save without “missing” your money is to ask your employer or your bank to direct deposit a portion of your paycheck to a separate savings account.  The general recommendation is that you save 10% of each paycheck; however, be careful not to set aside so much that you aren’t able to pay for your immediate expenses.  Every little bit adds up, so save as much as is within your means even if it is only $10 or $20 a month.  If you are able to save more than 10%, that is great too.

“If you are failing to plan, you are planning to fail,” said Benjamin Franklin.  Planning really can be a challenge, especially if you don’t know how to start.  One website that might be helpful is Sorted.org: https://www.sorted.org.nz/a-z-guides/setting-goals#s6.  It helps you to organize your goals with its “goals worksheet” and walks you through the planning and implementation process, offering tips along the way.  It even talks about goal-setting in relationships, which can be even more of a challenge than setting goals on your own.

In closing, it is important to set goals in order to achieve the life you want.  Start thinking about it now and begin developing a plan to get you there.  You will want to evaluate the short term and the long term, but allow for some flexibility in case your desires or values change.  Saving as much as you can now and building up an emergency fund will pay off in the long-run.  Be on the lookout in the next few weeks for more helpful tips about personal financial management during Financial Literacy Month.  If you have any questions about setting goals or financial management and would like help with any of those, please make an appointment on our website: www.k-state.edu/pfc/services.  We provide free and confidential counseling to all K-State students.

Rachel Vogler
Peer Counselor II
Powercat Financial Counseling
www.k-state.edu/pfc

Marriage & Money

Posted on by roxanne

There are a lot of things to look forward to and be excited about when planning a wedding and ultimately a marriage. The financial aspect of a marriage can be complicated and the most stressful. Last week, February 28th and March 1st, we held two seminars that hopefully helped soon-to-be marrieds feel a little more at ease with their upcoming unions; at least the financial part of it.  🙂

As a reminder to those who attended and for those who were not able to attend, I would like to present some of the key points from the event:

1)     Effective communication is KEY:  I know some people will read this and think I am being a bit touchy-feely about this, but I promise you that if you want your conversations about money (or really anything for that matter) to be effective, you want to make sure you understand where the other person is coming from. You want to remember that what one person thinks is erratic behavior, the other may think it is perfectly normal. One person may love to eat out and enjoy spending their money that way while the other might think that is an enormous waste.  In financial matters it is so important to be united. Did you know money disagreements are the top cause of divorce in our country? Once you feel you understand each other, not necessarily agreeing with one another, then progress can be made and compromise can happen.

2)     Having the same goals:  There are a lot of things to plan for: buying a home, funding your children’s educations, vacationing, retirement, etc.  How do you decide which ones are the most important? Communication.  Once you have established common goals, you need to plan, prepare, carryout the plan, and then occasionally evaluate your progress and potentially re-prioritize.

3)     Budgeting: This is so critical.  I don’t know many people who reached any goal in life on accident or without any preparation.  Budgeting helps you bring your behavior in line with the goals for which you are striving.  Remember to regularly review your budget and make corrections as necessary.  Check out our website for some budgeting tools: http://www.k-state.edu/pfc/budgeting/

Marriage is great, but it can be a challenge. If you follow these principles you will have managed the financial challenges that can arise in a marriage. Congratulations to all who are planning to get married and join their finances with their partner!

 

Sam Honey
Peer Counselor I
Powercat Financial Counseling
www.k-state.edu/pfc

 

Joining Finances?

Posted on by roxanne

Are you a newlywed or thinking of joining your finances together with your significant other?  Instead of jumping in head first, you should do your research.  Here are some tips to consider when deciding how to join your accounts.  Remember both parties need to communicate, decide on a joint or individual account, or both, and ask about online banking.

Talk openly and honestly about finances with your spouse so you can begin to understand how they handle money.  Both parties involved need to decide how they will share the task of managing their money and expenses.  Take into consideration each other’s strengths and weaknesses; maybe one of you is more organized with money and should be in charge of paying the bills.  Agree on a budget to plan for everyday expenses and reach long-term goals together.  Set some ground rules, such as which types of expenses you need to decide on together, and how much either of you can spend without consulting the other party.

Then, you must decide if a joint account or individual accounts works best for you.  If you are having troubles deciding if joint, individual, or both is best you are not alone.  Many couples open joint accounts and pay all their expenses jointly.  Other couples choose to have one joint account for shared expenses such as housing payments, and separate individual accounts for personal items such as clothing.  Still others prefer to keep individual accounts, and share the bill paying duties.  If you do choose joint accounts this means shared responsibilities.  Either of you can withdraw or transfer funds, and make payments.  If one of you overdraws the account or bounces a check, both of you are liable.  Each person will need the appropriate information and identification with him or her when applying for a joint account.  This includes Social Security numbers, driver’s license or other ID numbers, and employment information.  If you apply in person, you will both need to sign the application.

For joint checking accounts, and savings accounts with check-writing privileges, you get one checkbook.  You can both access the account, and any other accounts you have, through online banking.  Banks will have each of you choose your own username and password, so you and your spouse will have access to your joint accounts, and you alone will have access to your individual accounts.  You can view account balances and history, receive your bank statements online, transfer money into your joint account, set up services, and more.

Remember, there is not a “correct” way to join finances with another person, but it is important to make the best decision for you.  This decision will come with communicating and compromising on the best option to manage your money together now and in the future.

For more tips and ideas see http://news.yahoo.com/tips-combining-finances-getting-married-213600423.html and http://www.huffingtonpost.com/learnvest/love-and-money_b_1870705.html.

 

Ronika Ledesma
Peer Counselor II
Powercat Financial Counseling
www.k-state.edu/pfc

Financial Success Stories

Posted on by roxanne

The Merriam-Webster Dictionary defines success as “the accomplishment of the aim or purpose.”  At Powercat Financial Counseling, our counselors’ number one concern is to help our clients achieve financial success. There is no easy button or simple recipe for reaching financial success. However, included in this article are simple financial steps that can help anyone get started in the right direction to becoming their own financial success story. Also, included in this article are client success stories, as related by Powercat Financials peer counselors.  Please note that the client’s names have been changed in this article to protect their privacy. To begin, you will read about Shelly and the path she took to becoming financially successful.

Shelly struggled with finances early on in college and had to work 20 plus hours a week to make ends meet.  She had gotten in over her head in credit card debt and was feeling a lot of financial stress about her situation.  She was active on campus and a leader in student organizations.  She aspired to help her family be financially successful and wanted to set a better example for her siblings.  We worked with Shelly on her budget and reviewed a plan to pay down her credit card debt.  Her dedication to improving her situation was apparent; she just needed help getting started on the right path.  She stopped using her credit cards and stuck with the plan we developed no matter how challenging it seemed. She came back to us near the end of her college career with a totally different perspective.  She’d secured a great career opportunity and no longer had credit card debt to pull her down financially.  She was so relieved and felt more secure with her situation.  She even talked about starting to save and put money aside for her siblings.  With our help, she realized the financial success she’d dreamed of.

With every success story there is a lesson to be learned. In Shelly’s case, the lesson is the importance of establishing and following a budget. This is the first step to becoming financially successful.  Budgeting is particularly important in college when majority of students funds are limited.  Using a budget is a way for students to stay on top of their finances. In order to start a budget the first step is to estimate your expected expenses for one month. Next, closely track what you actually spend over a month’s time.  Finally, revise spending habits in order to stay within the budget. You can read additional information about creating a budget along with access to our budget form click on the following link. http://www.k-state.edu/pfc/budgeting/

The next client success story involves a young lady named Katherine. Katherine sought out our services after breaking her leg. She did not have any health insurance and was unable to receive financial support from her parents. When she first met with us she was overwhelmed with the idea of paying off her medical expenses. The billing departments had been contacting her and the financial stress she was feeling was widely apparent.  The first thing we helped Katherine with was to help her organize the bills and establish a plan for paying them off. We helped her establish a budget, in which we included the medical payments. After working through a budget and offering her additional advice about student health insurance options Katherine was able to breathe easier.

As before, there is another lesson to be learned from Katherine. In this type of situation, the importance of having a budget does come back into play. However, this client was an excellent example as to why individuals should have an emergency fund established. It may seem like a daunting task, but even just saving $20-50 dollars every month could help make those unexpected situation less stressful. An easy way to do this is to “pay yourself first.” If you have direct deposit at your job, set up your pay check so part of it goes into a savings account.

Success is measured differently for everyone. For Shelly, it was becoming debt free and for Katherine it was paying off her medical bills. So help yourself become a financial success by tackling one financial goal this month. If you don’t have a budget, start working on one. Or perhaps you want to start saving for your emergency fund; start by setting up a savings account this month.

 

Anna Govert
Peer Counselor I
Powercat Financial Counseling
www.k-state.edu/pfc

Importance of a Financial Plan

Posted on by roxanne

With any event, it is important to have a map of where you are and where you are going. Managing your finances is no different. Not only is it responsible to have a financial plan, it also comes with many benefits and few costs. I would like to focus on the importance of having a financial plan upon entering college and the urgency of creating one if you are student who does not currently have one.

When you step onto campus for the first semester of your freshman year, hopefully you have some savings from part time jobs in high school, graduation gifts, scholarships, some support from your parents, education funds, and maybe a few student loans to help you have enough cash to make it through your first year of school. However, as you progress through school, the tuition bills begin to add up, the scholarship money tends to get smaller for upperclassmen, and mom and dad may feel the need to teach you financial responsibility by letting you support yourself.

Without a financial plan, it is very difficult to know if you have sufficient funding and it is very convenient to spend money freely on eating out, going to concerts or movies, and other recreational events. Also, it is difficult to foresee upcoming problems with your finances if you neglect to take the time to consider what your financial future will look like. In the instance of not looking ahead, when problems do show up, they can be very hard to overcome. You may have used up all of your savings, scholarship money, and student loan money that was intended to last you through the entire semester before you realize you have a problem. In order to have the cash to pay the bills to get through the semester you might have to take on a job or even a second job if you already had one. Another option is to accept more student loan money, which can be difficult and can set you back upon graduation. Most students would agree, working while going to school and trying to juggle a social life can be extremely stressful. As you can see, not properly allocating your money has many adverse effects that go beyond not having enough cash. You can lose your free time, struggle to do well in your classes, and add unnecessary stress to your life all by not having a financial plan.

However, there is good news. With a few hours of time and some number crunching, you can be on the road to responsibility and financial success.  With a financial plan there is potential to save yourself time, money, and stress. With all the benefits and such little cost, it seems silly not to have a financial plan.

Developing a financial plan is simple. First, you need to find out where you are. Take a look at your current resources and expected expenses for the upcoming semester. Calculate the savings you expect to use, your expected income and expected expenses on a monthly basis. If your resources do not meet your expenses, you know in advance that you will need to find sources to finance your need. By knowing this before it is an emergency situation, you give yourself the luxury of time to solve your problem. Once you have your plan in place, you have to execute and track your progress. Keep records of all your expenses (receipts, bank statements) and income (pay stubs, loans). By comparing your actual amounts with your estimates on a monthly basis you can see where you are going and if adjustments need to be made.

It is my encouragement to you to develop a financial plan and follow it closely. If you already have one and have not been utilizing it, please start. By being responsible with your money in college you are putting yourself on the track to get a fulfilling college experience, graduate with minimal student loan debt, and the potential to start saving and investing for retirement at an earlier age. However, it all starts with a financial plan so save yourself time, money, and stress and develop a financial plan.

If you’d like to meet with a Powercat Financial Counseling peer counselor to get free assistance in developing your college financial plan, please contact us at powercatfinancial@k-state.edu or call us at 532-2889.  We’re students just like you and are here to help.  We have more information about this subject on our website at http://www.k-state.edu/pfc/planning.

Matt Kiehl
Peer Financial Counselor I
Powercat Financial Counseling
www.k-state.edu/pfc

Setting Financial Goals

Posted on by rl398906

I believe that everybody has career goals. But do you have financial goals? Setting financial goals is just as important as setting your career goals. It helps you to keep focused on the future, know what you want to accomplish financially, and how to get there.

How to set financial goals:

Step 1: List all of your short-term and long-term goals

– Short-term goals are usually 2 years or less

– Long-term goals are usually 5 years or more

Step 2: Prioritize all of these goals

– Put the goal that is most important to you first.

Step 3: Develop a concrete plan of steps to reach these goals.

Tips when setting financial goals — Be SMART!!

Specific

Measurable

Attainable

Relevant

Time-Frame

For exmaple:

A vague goal would be: “I will do something fun for Spring Break.”

A SMART goal would be: “I will save $250 from my work by March to participate in an Alternative Spring Break program to drive to Chicago with other group members.”

Set your financial goals now! Be SMART!!

Junyu Zhao
Peer Counselor II
Powercat Financial Counseling
www.k-state.edu/pfc