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Expert offers financial advice
College students can benefit from financial advice, even when it's targeted at an older audience.
Published 8/20/2012 6:00:00 AM
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With a new year starting and many students heading out on their own for the first time, financial challenges can be overwhelming. But in “The 7% Solution: You Can Afford a Comfortable Retirement,” a book published this year, author John Graves gives four tips that even college students can benefit from.

1. Frugality: live within your means. Understand need versus want.
2. Saving: save something from every allowance.
3. Debt: avoid it. If you must use it, pay it off as soon as possible, but cash is always king.
4. Tithe: give back something to your community, however you define it.

Graves based his book on his 28 years of independent financial experience, but WSU students have their own views.

Senior humanities major Jarrod Larse said he agrees with Graves’ suggestions, especially about living within one’s means and putting money into savings.

“When you’re in college, you’re in those first steps of starting out on your own, and establishing good spending habits is going to help you so much more in the long run,” Larse said.

Living within one's means is the first step towards financial independence, he said. Sacrifices might have to be made simply because certain expenses are no longer essential.

Johanna Brown, who is pursuing a master’s degree in teaching, said knowing the difference between want and need is what separates children from adults.

“Students in college are just beginning to develop their prefrontal cortex, which helps with complex decision making,” she said. “It's hard to learn that whatever is now is not the most important, and without a parent guiding you or restricting you, students have often not had to make financial decision like this before.”

This short-term decision making could affect students who obtain financial aid, she said.

“Living off financial aid means it's even more important to manage your spending, because a large portion of that money is probably coming in the forms of loans that you have to pay back,” Larse said. “It becomes really important to ask: 'do I really need to eat out for lunch every day? Is that money I can afford to spend, or should I put that toward something more important?'”

Financial aid can be difficult to manage especially because students are sent one check, Brown said.

“My freshman year, I actually sent the check to my mom and had her put an amount of it each month into my bank account until I was able to manage budgeting on my own,” she said. “It's important to divide it up and set a weekly budget and track that budget.”

Debt and tithes are helpful tools, but also big commitments, Brown said.

“Going into debt is a long-term commitment to something that you get right away,” she said. “Students don't often think about the interest that they are going to end up paying on their student loans and how long they may be paying it off for.”

Giving back in the form of tithes is huge for college students, but does not occur often, she said.

“I know that sometimes I think, ‘I don't really need a new t-shirt, there is someone else in the world who could feed their family with this money,’” Brown said. “Learning the value of small amounts of money in a community is a great way to help put your own finances in perspective.”

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