Your education should include financial literacy

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By Teresa Dewald, Contributing Writer 6:46 PM Saturday, May 28, 2011

Graduating and moving onto a new chapter in life is exciting. You have so much potential. Part of your long-term success involves being informed and making wise financial decisions. Here are some tips from those with a lot of financial know-how:

Have a checking and savings account

If you don’t already have a checking or savings account, go to your local bank or credit union and set one up. Somebody at the financial institution you chose can help you set up direct deposit and help you decide how much you should put in checking or savings.

D.R. Fannin, director of Wright State University’s Center for Economic Education at the Raj Soin College of Business, says you should always pay yourself first and set a certain percentage of your wage for savings.

“It’s important to allow the child to have some degree of financial independence,” said William Burke, CEO of Day Air Credit Union. Parents can arrange to have access to their child’s savings and checking account, making deposits and helping manage finances.

Consider using a debit card

Debit cards can be used to access ATMs. They can also be used in place of checks and cash. They look like credit cards, but they’re not. To be able to use a debit card, you have to have money in your bank account.

You need to know your financial habits. Burke says debit cards work best for those who have a hard time with financial discipline.

Build credit wisely

Fannin says you can begin to establish your credit history by having parents co-sign for your first credit card. He adds that the card needs to be used responsibly.

It may not be exciting, but Fannin says you need to read the fine print.

Also, don’t acquire too much credit too quickly. Doing so can set off red flags in your credit report.

Once you have a credit card, be smart when you use it. Burke says, “Respect the danger that it can get you into.”

Know the Annual Percentage Rate on your credit card and do the math when you use it.

“When you’re using [your card] add in the cost of credit,” said Jodi Owens, a financial aid officer at Sinclair Community Colleges. How much will a $10 lunch really cost? It will cost more, if you don’t pay your balance off every month.

Fannin wants people to know that their credit can impact their ability to get a job and even their insurance rates.

He also advises people to check their credit report at least twice a year.

Use student loan on just the essentials

Fannin suggests that you only use your student loan funds for school expenses. Imagine paying for that school sweatshirt or pack of gum 10 years later. How much would they actually cost? It’s better to spend your student loan money on the essentials.

Owens recommends that you know how much you will owe in student loans before you have to start repaying them.

“Have a plan before you take on the obligation,” said Owens. This bit of advice can be applied to every financial decision you make, Owens added.

Owens, a financial aid officer, says that you should research your major before you begin your studies. When you graduate, will you be able to get a job in your chosen field and will it pay a decent salary? Owens says you should know how much your diploma will be worth when you graduate.

Live on a budget

Once a year, you should examine what you’re spending your money on, says Owens. “If you don’t know where you are, you can’t get anywhere. You have to be real honest with what you’re spending your money on,” she said.

Know the difference between needs and wants. Owens suggests that you make a list to figure out what is necessary and to be honest with yourself when making the list.

Learn how  money works

The college or university you choose to attend will most likely offer financial literacy programs. Seek them out. If continuing your education is not in your immediate future, don’t hesitate to ask somebody at your financial institution for help. Local organizations often have financial literacy workshops that are free of charge.

Amy Cline, manager of the University of Dayton branch of Day Air Credit Union, is there to help students. She works with student groups and in dorms to offer financial literacy programs.

“The choices that students make now will affect them in the future,” Cline says. The credit union also offers a 10-week mini course on financial literacy.

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