Balancing a checkbook (yes, that’s still an important skill), filing personal income taxes, examining the costs and benefits of student loans, or calculating retirement needs are topics often overlooked at the collegiate level. But many college students—and even graduates—lack these simple, yet critical, skills.
Professor Jing Jian Xiao and Assistant Professor Nilton Porto of URI’s Department of Human Development and Family Studies in the College of Health Sciences, teach courses that help students learn the basics they’ll need now and for the rest of their financial lives—“Money Skills for Life” and “Personal Finance.”
The tips below are just a few of the basics Xiao and Porto teach their students.
The last tip on the list is particularly important for college students to consider, given the ongoing student loan crisis in the United States. The average student leaves college with about $30,000 in loans to repay, according to the Pew Research Center, and roughly 10 percent are late or delinquent on their loans. “It’s OK to get a loan if you need one,” says Porto, “Just make sure you are taking the right amount and that there is a plan in place to pay it back.” •
–Patrick Luce ’99
Let’s face it, many of us, even if we think we know this stuff, could use some tips and reminders. Here are the basics, according to Xiao and Porto:
- Put 10 percent of your salary into savings every month.
- Have an emergency savings of at least three months of your income.
- Housing and all other obligations should be no more than 50 percent of your disposable income.
- Establish and maintain good credit. “Having enough savings is number 1, but good credit helps in an emergency,” Porto says.
- Use the Rule of 72 to determine how long it will take an investment to double: Divide 72 by the expected growth rate of your investment to get the number of years it will take to double. For example, if the growth rate is 8 percent, it will take nine years (72/8) to double the investment.
- Limit student borrowing to your first year’s expected annual salary.