In a recent article in the New York Times, Ron Lieberman addressed some important questions about financial aid submitted to him by prospective college students. In introducing his topic, however, he makes an important point: “Figuring out how to pay for college has quickly turned into one of life’s most complicated financial decisions.” He gives a few reasons for this:

1. There’s uncertainty as to whether the student making the decision will be able to pay back his student loans.
2. There’s uncertainty as to whether spending more on a prestigious school will lead to a future that pays more as well.
3. There’s the issue of inexperience, the fact that the prospective student has never had to make a decision with such far-reaching and expensive consequences before.
4. There’s a lack of good information, plus a scarcity of reliable sources to provide it.

There’s also uncertainty in whether college grads will find their expensive degrees valuable in the job search after graduation. In just the last few years, technology, aging baby boomers, and our changing economy have redefined what the most in-demand jobs will be in our recent future. The BLS outlined the following as the fastest growing jobs through 2018:

• Biomedical engineers 72%
• Network systems analysts 53%
• Home health aides 50%
• Personal and home-care aides 46%

Some students may choose their major based on potential job security and choose one of the above fields that is projected to be lucrative. However, some may make a seemingly right decision, and find they made the wrong choice after graduation. Many students dive right into college out of high school with a vague idea of how important their major is to securing a career and for their future happiness. Within their four or more years of college, students commonly change majors, minors, and many transfer schools. Not only does this hike up tuition, it is also telling of how people’s interests change over the course of their life, or even a few years. Check out the article “Picked the Wrong Major? Here’s How to Pivot Into Entrepreneurship,” for real stories on young adults who changed their career path after graduation.

Yes, there is a lot of uncertainty going into college. Is it for me? Do I have an alternative? Do I want to have this career for the rest of my life? Will I feel passionate about my career choice in ten years? It’s hard to say. But you can take the financial guesswork out of a college education by getting prepared early. Parents need to talk to their children about their finances and open a discussion about what college is practical and what choices the student has for higher education. Our book Dollars & Sense: How to Be Smart About Money is a great financial literacy tool for teenagers. They get answers to their questions about saving, spending, and attending college and activities that require them to practice smart spending and saving with a goal in mind. Each chapter also contains questions the teen can ask their parents to become more involved in making adult financial decisions to prepare them for the rest of their lives.

How did you find the college that was the right fit for you? Maybe you knew you wanted to live in a big city, that the school had the best program in your field, or because your high school friends were going there. Today, most students are swayed by a different measurement of fit. A recent study by Sallie Mae found 69 percent of students chose colleges based on affordability. To make schools more affordable, 51 percent lived at home, 55 percent chose to live with a roommate, 50 percent increased their number of work hours, and 66 percent reduced spending.

Today, students pay for a 30 percent of their college education, up from 24 percent four years ago, and parents pay 37 percent, down from 45 percent. Students, more than their parents, believe their education will be an investment in their future and that it’s worth the financial stress.¹

The recent NPR story “Families Make Big Changes to Pay for College,” shows how paying for an education is affecting today’s family. Maureen O’Brien earned her first degree in 1996, and after losing her job to outsourcing, returned to school to become a physician’s assistant. She took out loans for both degrees and is still paying both of them off. She also has a daughter who she encouraged to attend any college she wanted. After spending two years at the University of Vermont and paying more than $49,000 a year, her daughter was forced to transfer to a state college to finish her degree. Now, O’Brien’s younger son is entering his freshmen year of college at Arizona State University. O’Brien makes $93,000 a year as a physician’s assistant; however, one-third goes to student loans. She’s considering getting a second job so she can afford to put away money for retirement, savings, and her kids’ student loans.²

A college education should never be a regret. That more students are attending schools they can afford, budgeting, getting jobs, and being frugal about living situations, doesn’t need to be viewed as negative. This means more students are being financially responsible, living within their means, and taking control of their finances earlier in life. More students are paying for more of their tuition, which means more students are willing to make an investment in their education and their future.

LifeBound’s book Dollars and Sense: How to Be Smart About Money can help parents and students navigate college finances and start financial discussions about college, career, and life. This book gives students the big picture of saving, spending, and budgeting throughout their lives and encourages them to use their financial savvy to make smart decisions now and for tomorrow.

For more statistics from the Sallie Mae study, see their infograph A Snapshot of How America Pays for College 2012.

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¹“Families Make Big Changes to Pay for College,” by Tasnim Shamma. 2 August. 2012. NPR. Accessed on 3 August 2012. http://www.npr.org/2012/08/02/157657475/families-make-big-changes-to-pay-for-college

²“How America Pays for College 2012: A National Study by Sallie Mae and Ipsos.” https://www1.salliemae.com/about/news_info/research/how_america_pays_2012/

There are many reasons college can be stressful for students. Entering freshmen might suffer a culture shock or fear their heightened level of independence. College sophomores have the stress of picking their academic path that should set the pace for the rest of college and their career after school. With their general classes behind them, college juniors go on to higher-level classes and get heftier workloads. Seniors start getting a taste of the real world as interns and student aids, while having the most difficult classes yet. And this is for the traditional student who has remained on-track to graduation. Due to any number of circumstances, many students’ college career will continue over five or six years.

College students are confronted with many social, emotional, and academic stressors, but according to a new study, the number one stress causing area in a college student’s life is financial. The Inceptia survey recently concluded the top five reasons college students feel stress are:

• Need to repay loans
• Cost of education
• Borrowing money for college
• Need to find a job after school
• Academic challenge of course work

It’s no surprise that college students aren’t exempt from the pressures of a bad economy. In fact, nearly half of young adults between 18 and 24 are unemployed, making finances tight and a worry at a young age. For college students, financial worries are about more than the balance on their bank account. The Inceptia study also found one in three students say money is poorly effecting their grades and one in four say their finances have required them to cut classes from their courseload.

Until there are more jobs, there is only so much students can do to save money for college and make money while they’re students. However, the stressors, like Need to repay loans, Cost of education, and Borrowing money for college, are all things that students can prepare for and have control over.

LifeBound’s book Dollars & Sense: How to Be Smart About Money addresses the common financial questions, pitfalls, and successes that every teen needs to know about before heading to college or into the world of work. Dollars & Sense answers questions like:

• What’s the difference between a want and a need?
• How can I save now to be prepared for tomorrow?
• What student loan is right for me?
• Can I afford my dream college?
• How long will it take me to pay back my student loans?

Many students go to college, sign up for loans, and are shocked when they get the bill. Preparing and taking preventative financial measures can help students avoid many of the top financial worries they have for college and the future. Read the NACADA review of Dollars & Sense to find out how you can use this book for both high school and college students.

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“Back to School: Top Five Things That Stress College Students,” by Dan Kadlec. 31 July 2012. http://moneyland.time.com/2012/07/31/back-to-school-top-five-things-that-stress-college-students/

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What’s one way we can help the economy from slipping deeper into the recession and prevent it from happening in the near future? Educate our youth with personal money management skills.

In the 2011-12 school year, Virginia will become the fourth state that mandates financial education, among Missouri, Utah, and Tennessee. Other states are also working toward becoming part of the financial literacy movement but currently only require teachers to incorporate personal finance lessons in other classes.

In a recent Teens & Money Survey by Charles Schwab, researchers found 16-to-18-year-olds and their parents have tendency to get their priorities mixed. Teens are more likely to have an iPod, cellphone or computer than a checking or savings account. Parents are also more likely to lecture their kids about cleaning their rooms and drugs and alcohol than they are to discuss personal money management skills. Money is the number one reason couples get divorced. It can also cause unhappiness, stress, and crime. Teens have much cooler things to do than talk finances and parents have more issues to discuss with their teens than minutes in the day, but somewhere along the line both parties need to see the importance of understanding finances for the present and future.

When students don’t learn financial skills at home or in the classroom, they go out into the world without the skills they need to succeed. Students graduating from high school are bombarded with college loan offers, credit card offers, and a new freedom that tells them to buy buy buy. Should they accept a private loan? Do they know what an interest rate is? An investment? A budget sheet?

You don’t have to wait until financial literacy programs become mandated in your state to start teaching a new generation how to be smart about money. LifeBound’s new book DOLLARS AND SENSE can be taught to teens in the classroom or independently read at home. Teens learn about finances from real professionals, the mistakes of others, real-world math problems, fast facts, and more that all align to the financial literacy standards developed by the Jump$tart Coalition.

How are you teaching Generation Y about finances?

Source:

McDermott, Casey. “States start to require courses in financial literacy.” USA Today. Accessed on August 17, 2011 from <http://www.usatoday.com/money/perfi/basics/2011-08-12-personal-finance-courses_n.htm>

Did you know that no matter the amount of money you have, donating some of it can make you feel better? In the article “Worried About Money? Give Some Away,” Linda Wasmer Andrews explains why giving money to those in need can boost your spirits:

It can make you feel connected: In one theory, it’s believed that people who have less money are more generous with their funds because they know what it’s like to sometimes need financial help from family and friends. Giving money can make you feel like part of a community, whether it’s feeling closer to family and friends or becoming part of a cause.

You’re making a difference: When you give even a small amount, you can take your mind off of your own worries, financial or not, by helping someone else out. Give a dollar at the checkout stand or register to walk for a cause.

It gets rid of stress. In a study by the University of British Columbia, researchers found a connection between being stingy with money and cortisol, a stress hormone. In the study, economic students played a game where they were each given $10 and could either keep it or donate it. Of the students who kept more of the money, they felt more shame, which researchers predicted to be a cause of higher levels of cortisone.

Sometimes the hardest part about doing something new is just doing it. If you want to become a charitable giver it’s never too early or late to start. Show your kids that you think it’s important to give to things you find important so they can mimic your healthy habits. Have a conversation about the things that inspire you and find out what inspires or concerns them. Are they concerned about the earth? Or maybe less fortunate kids in other parts of the country or the world?

Kids, and adults, may not have a substantial amount of money to give in a lump sum. If so, set a goal for how much money you can save every month and put that monthly sum away for an entire year. At the end of the year, donate to your cause.

If you could give to one cause, what would it be? What’s one step you can take to start making this wish a reality? Share in the comment box below.

Source(s):

“Worried About Money? Give Some Away,” by Linda Wasmer Andrews. August 12, 2011. Psychology Today. Accessed on August 14, 2011. <http://www.psychologytoday.com/blog/minding-the-body/201108/worried-about-money-give-some-away>

Many of us know we should save yet many of us don’t.

We tell younger generations to save so they can afford the expensive things later in life, like investing in real estate, retiring at a decent age, and raising a family. We want them to be able to afford the education they crave, the future they dream of, and just be happy.

Saving can feel like a selfish thing. When you put limitations on your spending, you most likely do it to personally reap some benefit in the future. It can also feel like the reward may never come to fruition. Forty percent of Americans whose household makes $35,000 or less believe they have a better chance of getting $500,000 by winning the lottery or sweepstakes than by saving and investing small sums of their pay. But that’s not the case for all savers.

Oseola McCarty spent 87 years of her life as a washerwoman in Mississippi. McCarty dropped out of school in sixth grade to start working. She was never married, didn’t have any children, and never learned to drive. She felt blessed to have a job, as many black people in Mississippi at the time weren’t as fortunate, and lived a frugal life with a stringent savings plan.

After living a long life denying many luxuries in life, she was able to save $150,000. But at her age, she thought it was too much money for one woman to have. That’s why she decided to donate her money to the University of Mississippi to help finance scholarships for black students.

“I wanted to share my wealth with the children,” said Miss McCarty, whose regretted never returning to school. “I never minded work, but I was always so busy, busy. Maybe I can make it so the children don’t have to work like I did.”

How can sharing the story of Oseola McCarty help youth understand how saving early can pay off big in the end? How does McCarty’s story change how you feel about saving? How about generosity?

Share in the comment box below.

Source:

Bragg, Rick. “All She Has – $150,ooo – Is Going to a University.” August 13, 1995. New York Times.  Accessed August 11, 2011. <http://www.pulitzer.org/archives/5872>

“Oseola McCarty : A symbol of selfless giving.” NathanielTurner.com. Accessed on August 11, 2011. <http://www.nathanielturner.com/oseolamccarty.htm>

“Saving Stats.” Accessed on August 11, 2011. <http://www.projectcash.unh.edu/savingStats.htm>

It’s almost time to go back to school and college freshmen might be getting a surprise when they realize the cost of college doesn’t end with the tuition bill. Whether students are living in the dorms, at home, or renting, they are all transitioning into a new environment with a new lifestyle and new expenses.

College students are notorious for eating out for too many meals, taking out too many loans, and not worrying about their debt until it’s time to start paying it off. However, just a few hints and tips can help shape a more financially secure college experience for students. Since it’s never too early to start planning your finances for college, this list is also great for high school students who plan to attend college in the future.

• Scholarships and grants: Don’t make the excuse that you won’t qualify for a scholarship or grant. You might be intimidated by merit-based money awards that rely on your impressive grades to qualify, but if you’re an average scoring student, you might still qualify for general or need-based awards. Did you know there is a scholarship for being a male who stands over 6′ 2″? Do your research and try to finance your college with little or no loans.

• Start saving: Setting aside a dollar amount or percentage of your income for college is a great way to start a college fund. Even if it’s only $100 a month, the money will add up and you’ll be happy you have it when it comes time to pay for books, groceries, gas, or treat yourself to a movie.

• Cut back on spending: Make a budget so you know how much money you need to live, how many hours you need to work, and how much financial aid assistance you need to cover the difference. Once you make a budget, cut out your unnecessary spending by doing the following:
  • Mark which items are ‘wants’ and which are ‘needs.’
  • Ask yourself: Can I get rid of any of these wants? Am I being honest about which expenses are wants and which are needs?
  • Cut out as many wants as you feel comfortable with cutting out at this time.
  • Hold yourself accountable to sticking with your budget. It’s helpful to have support. Tell those closest to you about your new healthy spending habits.

• Know where to find help: Do you know where the financial aid office is on campus? Do you have an advisor? Do you know where the closest location of your bank is? Do you know how to speak to a personal banker? Do you know your bank’s customer service line? Don’t wait until financial disaster strikes to look for help. When you sense trouble, get financial help right away.

Getting financially literate before making mistakes like signing a lease with a boyfriend/girlfriend, using a credit card for all your purchases, accepting all the loans the school offers you, or not paying your bills on time is important to your financial security. So is knowing how to get out of a financial bind when you accidentally lose your way. LifeBound’s newest book Dollars and Sense: How to Be Smart About Money is a great resource for teens to learn about their relationship with money, saving, investing, budgeting, and getting financially fit for the future.

College is a big investment, and due to cuts in school funding and the outlook of the economy, some might think it’s too much of a risk. However, in a recent study, researchers found graduates holding a bachelor’s degree make 84% more than high school graduates over their lifetime. Those holding a doctoral degree will earn $3.3 million in a lifetime, compared to a college grad with $2.3 million and those holding a high school diploma with $1.3 million.

Low college graduation rates have not only made many question if college is for everyone but also if college students are prepared with the skills they need to enter college. Even if students are entering college with stellar grades in all their classes or with a pocket full of federal loans, do they have the skills to figure out how much college costs, how much interest they will pay, and how long it will take them to pay it back?

Among many great financial skills, LifeBound’s new book Dollars and Sense: How to Be Smart About Money helps students understand their relationship with money, what debt is and how to avoid it, how to compare costs of schools, and the benefits to saving for a big investment — like their education. When we think about college, we focus on the skills to get into college, the brains to pass college-level courses, and graduation day. In reality there’s a lot more to it. In the next few years following high school graduation, students will also accept or deny loans, lose and gain employment, have difficult relationships, and transition into new phases of life. Are your students ready to make financial decisions as they transition into higher education?

How have you helped your students or teens get financially prepared for college?

Reference:

“College graduates earn 84% more than high school grads, study says”  http://latimesblogs.latimes.com/money_co/2011/08/college-gradutates-pay.html

This week I’ve dedicated the blog to the topic of financial literacy as we count down the days to the release of LifeBound’s newest addition, Dollars and Sense: How to Be Smart About Money. We covered how finances affect lives, education, math skills, and the future. We also spoke a lot about personal money management in terms of having money. But, another side to managing your personal finances is knowing when it is time to donate to people who aren’t as fortunate as you or who you think deserve a helping hand.

According to the Forbes article “World’s Most Generous People,” billionaire Warren Buffet didn’t have any record of giving until a few years ago after the death of his wife and inspiration from his friend Bill Gates. In 2009, Forbes created a list of living billionaires who have given away $1 billion or more. There were 11 billionaires out of 793 who made it on the list. Gates is at the top of the list having given away more than $28 billion in his lifetime. Of the 11 billion-dollar donors, all but one are self-made.

Most of us don’t (and won’t) have the finances to give donations the size of these givers, but a donation doesn’t have to be big to make a difference. What are you inspired by? What do you think is important? Who do you want to help? Find a cause to which you can donate your time, money, or things you don’t need anymore. Some easy and inexpensive ways to donate to those in need include:

• Donate gently used clothes to second-hand stores.
• Organize a food drive or donate to one.
• Instead of giving gifts for holidays and other gift-giving occasions, give a donation to a company like Heifer International in honor of your loved one.
• Volunteer for a cause.

What do you do to make a difference? It only takes a little. Encourage generosity no matter the size.

References:

“World’s Most Generous People” http://blogs.forbes.com/billions/2010/06/16/worlds-most-generous-people/

“Billion-Dollar Donors” http://www.forbes.com/2009/08/24/billion-dollar-donors-gates-business-billionaire-philanthropy.html