Quality Essay

Money Management 101

Vintage fit, pearlised buttons and signature eagle embroidery. I was examining the AE Premium shirt at American Eagle Outfitters. I had to buy a new shirt for the night’s party (indulgence #1). Paritosh, a friend of mine, already has a similar one, so I skipped it. I walked around the store, nothing seemed attractive. I entered Guess’ store across the street. They seemed to have an impressive new collection. I liked the black Vader shirt. It had a banding detail at shoulders for an epaulette look and "Live the Moment" text and an additional eagle crest on the back. I took it over to the sales desk where I noticed their new line of perfumes. The girls did mention that they had got used to the old one, so I picked one up from the Suede line of fragrance (indulgence #2 & #3). A quick stop at California Pizza (indulgence #4) and then I headed over to The Opera night club at about 11 in the night after a stop in my dorm. The party was loud and filled with energy. More indulgences through the night (indulgence #5 till #?? lost count). Finally at 3:00am, I returned to my dorm, exhausted but content with the whole experience. I glanced at the whiteboard. Horror struck. A $600 housing deposit was due in a week and my bank balance was under 80 bucks.
Few college students know the difference between needs and wants. Budgeting, investment and limits are terms I learned during life at college. No one is born with an innate ability to manage money. I am learning it from my mistakes and so are others. However for many, by the time the skill matures, it may already be too late.

Citing data from Nallie Mae’s website, a leading student loan company, “The average outstanding balance on undergraduate credit cards was $2,169 in 2005 “ and “More than half the undergraduates with credit cards carried over monthly balances above $1,000.” The average rates on these loans vary from the late teens to thirties. Consider the fact that many students are on loans for the tuition as well. It doesn’t take calculus or trigonometry to realize that this debt will definitely follow them for 6-15 years after graduation. Who knew that we might still be paying our pizza tab 10 years after graduation?

That night, sleepless in bed, I pondered over the cause of my mismanagement of money. In the past, my parents did make attempts to educate me on management of money, but their attempts were futile. I realized how listening to them then would have made life so much easier now. Then my thoughts wandered over to my friends and it struck me that they too were not experts in this subject. Everyone knows someone in a financial crisis. My Roommate paid over $100 on overdraft charges for his check card, other friends loaned over $100 from each other, and still others depleted their spring break savings a month in advance. Fiscal responsibility is easily forgotten when clubbing, eating out, attending concerts and shopping for clothes, CDS, electronics.

So who is to blame for this ignorance? What is the source of this viscous cycle of debt and repayment? I believe it is the failure of the schooling system. Schooling is meant to prepare us for the life ahead, the future. But obviously it has failed miserably. High school taught me many things, Physics, Chemistry, Mathematics, social etiquettes, morals and even about sex. However one of life’s most important lessons was missed out; how to organize life, mainly money.

Even though I took classes in Economics and Management at High School, which talked about “investments, stocks, loans and installments” there was never anything that sounded like, “Don’t have balances exceeding 200-300 dollars on a credit account.” In math we studied and worked out exercises on interest, tax, stocks, bonds and dividends but never discussed how they were significant in our lives.

Still not asleep, I rolled over on my tummy and thought about how I had spent all the money. A cup of coffee before class in the morning added $160 to a semester’s expense. My boom box, cell phone and other gadgets total to about $600. I had purged $400 on clothing and most surprising, $500 on gifts and birthday presents for friends! Assuming I totaled up $2000 of miscellaneous expenses on my student credit card, it would take me 24 months to pay the balance, if I paid $100 a month at 10% interest. That’s assuming I never charge another dollar to my card (how likely is that?).

Somehow I fell asleep with great uneasiness that night, but later I talked to a few students about this issue and one said, “I use a check card; I am forced to stop when I run out of money in my account”. Did he have any left in his account till his next paycheck arrived? No. He said he could survive through it, eating at the dining hall and avoiding social outings. Was this necessary? Wouldn’t he have been in a better situation, had he budgeted his spending?

I began thinking about how the system can be changed. Mainly about how High schools can integrate this important lesson into their curriculum. The first few obvious answers were to talk about day to day applications of subjects like Economics and Mathematics. A course for personal fiscal management could be used to get the message across. Discussions such as, “Where is the fine-line between being frugal and being a cheap-a$$?” and talks on how to balance a check book and manage investments would be effective. I don’t buy the argument that High school students would never pay attention in such classes. A skilled teacher can make even the most loathed topic, a prompt for the most enthusiastic discussion of the class.

I learned the hard way, when the housing deposit was due, that my fiscal management skills needed a revamp. I wasn’t disheartened, knowing that I wasn’t alone, there were many out there who hadn’t faced such situations and were still to realize the trouble they would one day get into.

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