Learning to manage your money important in today’s economy

When students go off to college for the first time, many have no idea how to budget, how to look for sales or how to get the best bargains.

These are not uncommon situations, especially when someone doesn’t have a lot of practical experience with handling money. Credit cards get maxed out and student loans accumulate and it’s often hard to keep up. Sometimes however, a  can help advise a student how to manage his or her money and show how to budget.

There is a relatively easy way to manage money and pay off bills. For starters, pay bills on a bi-weekly basis. For example, take the minimum payment and split it into two payments. Send the first payment in once the bill is received and then two weeks later send the other payment. This cuts down on the interest that is accrued on the 28-day cycle on which most credit cards base their percentage rates.

Some financial consultants suggest that their clients take a piece of paper and draw a triangle on it. On the left hand corner, starting at the base write $10, then working your way up double the amounts — $20, $40, $80, $160, $320. If $320 is the most you can afford to save, then write it at the top of your pyramid. Then on the right side, work backwards — $320, $160, $80, $40, 20, $10. If you keep doing this consistently, in three months you can save up $1,500 or more. This style of saving is good if you get paid on a weekly or biweekly basis. It doesn’t work for monthly pay periods.

Limiting spending also is very important for young adults to keep in mind when managing money. Make everything last longer; nearly everything can last an extra week or more.

Getting help from an outside source can also be useful in helping to choose when and where to spend cash. Accountants are great, especially for business-related issues. However, their fees can be fairly high, so a consultation can be expensive. Investment advisers also are good, but they are going to want you to open an account and their fees are often based on what you buy.

Continuing education classes run by your town or county also can provide guidance in money management issues. If your questions are tax related, help can be found at tax advisors like HR Block.

Teens can learn about saving as early as high school, and someone who saves 10 percent of their income now and continues through the future will be well equipped for life. Teens should start a simple money market account in which they can start investing money. Asmall amount taken out of a checking account every month — say $25 to $50 — can be put into the money market fund, proving a way to work savings into a monthly budget. A small amount saved on a regular basis accumulates over the years.

It also is wise to avoid credit cards, at least initially, and to substitute a debit card instead. Better yet, pay cash as much as possible. Building an emergency fund of three to six month to live on is a good idea, especially in times like these where unemployment is especially prevalent.

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