Keeping track of finances, key to ending money strife

Student Life

For many college students, learning to live on a budget for the first time and having a limited income can pose significant challenges.

One unplanned expense can often snowball into a major financial disaster with little or no recourse other than using credit cards with high interest rates or taking out loans, both of which only provide temporary relief. While there are no easy answers to this dilemma there are some fundamental things students can do to stabilize their finances.

Everyone who uses a checking account needs to understand some basic missteps.

“Some of the biggest things we see with our student accounts are overdraft charges as a result of improperly balanced checkbooks and students not taking personal responsibility for their actions,” said Casey Sterling, branch manager of U.S. Bank. “A lot of people get into trouble with their debit cards by not keeping track of and recording their purchases, basically using the card until it stops working. This kind of impulsive spending leads to trouble and usually results in overdraft fees. I cannot emphasize enough how important it is to keep a record of purchases when using a debit card.”

Another issue affecting students at Western are payday loans.

“Payday loans are almost universally a bad idea,” said Larry Lawson, associate professor of finance. “People write checks against their next payday for often up to 100 percent interest, digging themselves into a hole they often cannot escape from. Or people hard up for cash get a loan against the title on their car often for as much as 300 percent interest. Failure to pay on time results in the vehicle being confiscated and often sold at auction to satisfy the debt. Though it seems like no one would agree to such terms, many people do everyday in desperation.”

Probably the biggest student missteps happen with credit cards. Credit card companies market to students to establish a brand allegiance they hope will be for life. Paying the balance in full each month is a good idea because paying the minimum balance will likely take 18 years to repay.

“A lot of students have trouble with credit cards and view the credit limit as an invitation to spend what they consider to be their money,” according to “The credit comes from the bank – not Grandma. For many, this is a revelation: Banks are in business to make money, and customers have to pay interest on the balance if they miss the due date.”

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