I'll admit it right off: I'm not a money whiz or one of those "experts" from an infomercial who can tell you how to turn a buck into a thousand overnight. I'm just a college junior. But I do know a few things about late-night pizza runs. (Do I really have the cash for this?) And I've had to buy books for a few semesters. (Whoa, that history book is how much?) And I've also been hit up for pocket change by "needy" roommates. (I guess I can loan you 50 cents—again . . . ) I've also learned a few things along the way about day-to-day money handling. So I believe I have some tips that can help you avoid many headaches—and keep you from begging Mom and Dad for "just another $10 to get me through the month—please!" What About Credit Cards?
The credit card! What a great invention. You can actually buy stuff without having any money. Sounds awesome, doesn't it? But, of course, the excitement fades and your smile turns to a frown when you're staring at a credit card bill in the hundreds or even thousands of dollars. No, credit is not free money. Far from it. When you present your card to a cashier at a store, a waiter at a restaurant, or the guy behind the snack counter at the movie theater, you've just taken out a loan. The credit card company has paid for your purchase, with the understanding that they will bill you for it. And when that bill comes, if you don't have the money to pay the credit company for your purchase, then you owe them the original amount plus interest. Let's be real honest. Buying on credit can be costly and dangerous. You can rack up big debt. And if your bills go unpaid, it can hurt your ability to buy things on credit in the future. Paying with cash is almost always the best way to go. Bank on It
I think I've said enough scary things about credit cards. Now let's talk a bit about a checking account. You know how this works: To use checks, you first set up an account with a bank and deposit money into it. Unlike a savings account, you usually do not earn any interest on your cash. Also, checking accounts do not work like credit cards. What you have in that account is all that you can pay with in checks. In fact, most banks have a minimum amount that always must be in your account. Fail to keep that minimum balance and you may be charged a fee, or you may lose your account with that bank. These amounts vary from bank to bank. It could be $50 at one bank. It could be $100 or more at another. I've found that credit unions tend to have much lower minimum deposits than most banks. Mine has a $5 minimum, which is much lower than the $100 minimum my friend's bank enforces. A credit union offers all the services of a "normal" bank, but is run as a not-for-profit organization owned by its members. And just by using its services, I am a member of my credit union. Credit unions are set up for specific groups of people, like students or teachers. For information on credit unions, go online to cuna.org. Shop around. Talk to people at several banks and whatever credit unions are available to you. Find out what services are offered, and also find out if there are any additional charges for those services. Did I Say "Debit"?
One of the greatest things around is the debit card. Looks like a credit card, right? Rectangular piece of plastic. Has your name on it. Comes with an expiration date. But don't let looks fool you. It's not nearly as dangerous as a credit card. Unlike the dreaded credit card, debits are all about using money you actually have. A debit card is just another way of getting to the money in your checking account, without using checks. And, hey, since those packets of checks cost money, you can save a little by using a debit card. They're also convenient: Most stores and restaurant that accept credit cards also accept debit cards. Additionally the card may be used at ATM machines to withdraw or deposit money into either your checking or savings account. You won't want to use your debit card at just any ATM machine, though. If you use an ATM machine not owned by your bank, you may incur a usage charge, which can be two bucks or more. How do you get a debit card? When you open your checking account, your bank or credit union will often issue you one. If they don't, be sure and ask about this important service. A Balancing Act
Now here's an amazing little piece of trivia: If you use a check or a debit card, money disappears from your account. OK, I know that's a big "duh." But it's amazing how many people quickly lose track of that fact. To avoid these "mysterious disappearances," you must keep your bank records in order. Anybody who has a checking account receives a monthly statement that shows your checking account balance. This balance will list every single deposit or withdrawal that you have made, amounts of checks that you have written, and amounts of debit withdrawals that you've racked up with your debit card. Now we all secretly hope our personal record will match our own bank record, but that doesn't always happen. A couple of years ago, I forgot about some purchases I made with my debit card. It was so easy to do, since all it took was a quick swipe of the card, and then I walked out of the store (that's convenience for ya!). At the end of the month, my statement informed me that I had about $70 less than my own records showed. I needed that $70 to help cover my school bill. Not awesome. The money came through for me in the nick of time, but not everybody ends up so lucky. When you first open your checking account, the bank will issue you a checkbook register with your checks. Use this to keep track of any changes to your account. Write a check, pull out your checkbook and write down the amount. Use your debit card, and keep the receipt—then don't forget to record that in your checkbook. Make a deposit, record it in your checkbook. The point: Record any transaction immediately after it occurs. That way, tomorrow's test, tonight's date, or, in my case, the 50-yard walk from the store to the car, won't cause you to forget. Set Spending Limits
As a college student, I can tell you that college life really is great. And I've made it even better by avoiding a lot of the headaches that come from sloppy money management. So my encouragement to you is this: Study hard, have a lot of fun with friends, keep that checkbook in order, and establish a pattern of wise spending and saving before you even think about getting a credit card. Also, watch that "binge spending." You know your own weaknesses, whether it's CDs, pizza or video games. Just set your spending limits and refuse to go over them—even if it hurts sometimes. Most of all, put God first in your life, and keep him there. Let him guide and direct all your decisions—including how you spend and manage your money. If you do, you'll worry less about where you're going to get another $10 to spend. Jon Watters is a junior at Trinity International University in Deerfield, Illinois. Copyright © 2002 by the author or Christianity Today International/Campus Life magazine.
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