Bobcat Personal Finance
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With the cost of living rising each day, one would assume that personal financial education would be a priority for any college student living in America. However, this assumption is often taken for granted by the majority of college students. In a survey conducted at Texas State University in the Fall semester of 2005, we found that:
- 50% of students have 1 to 3 credit cards
- 35% of these students do not know the interest rate on their credit cards
- Only 51% of the students surveyed follow a budget
- Around 75% did not have insurance or a cell phone account in their name
- 45% do not know which tax form they filed last year
- 89% of the students surveyed do not know their credit score
The sad reality for most students is that their financial education begins after being denied a loan or having to "take a semester off" from school due to financial difficulties. However, those students who are not in immediate financial danger are often the most ill-prepared to begin their own lives after college. Parents providing for their child's education often do not realize that they are handicapping their child's opportunity to learn about savings, budgeting and becoming a wise consumer.
Of the students surveyed, over half expressed interest in participating in a class on managing personal credit. Personal finance is a key issue involved with becoming independent. Because of the growing importance of credit scores, it is important for students to learn how to manage their credit.
Through this manual and the development of the Bobcat Personal Finance Program, we hope to better inform the Texas State student population about their personal finances and encourage the university to acknowledge the growing financial problems associated with young college students' lack of financial education today.
The manual we have developed for our thesis contains information regarding various subjects related to personal finance for a college-aged student. We begin with a discussion of Student Loans, including the growing need for student loans in today's society, options for students considering taking out a student loan. Following these sections, we discuss consolidation of student loans and student loan default, along with the consequences of allowing a loan to go into default status.
The next portion of our thesis discusses budgeting. It provides information on preparing a budget and tips and tricks for personal budgets. Characteristics of a successful budget, money management basics, and some basic information on the time value of money are also covered in this section.
We continue with discussion of consumer credit. The topic is defined, and the factors which make up a personal credit score are analyzed. We also offer tips for improving an individual credit score in this section. Items which are not included in the personal credit report and the reasoning behind the use of personal credit scores follows. This section concludes with examples of benefits resulting from maintaining a good personal credit score.
Immediately following the discussion of personal credit scores, we discuss the factors involved in choosing a credit card based on individual need. This is followed with some tips for using credit cards effectively in order to follow a budget, avoid excessive debt, and build a positive credit history.
Because of the growing threat of identity theft, the next section of our thesis is dedicated to answering common questions regarding this crime, such as:
- How does identity theft occur?
- How do identity thieves use my information?
- How can I tell if I'm a victim of identity theft?
- How can I remedy the effects of identity theft?
From the discussion of identity theft, we turn to information on tax preparation. In this portion, we discuss the basic principles of federal income tax, the importance of record keeping, and how to determine how much you owe. We then provide guidance on tax credits, focusing on the two major education credits available; the Hope Credit and the Lifetime Learning Credit. We conclude this section with information of the various tax forms and some helpful links for additional tax advice.
The next portion of the manual defines insurance. Information on automobile insurance is presented, including bodily injury coverage and property damage coverage. Advice on how to manage automobile insurance cost is given next. Following the discussion of automobile insurance, health insurance is presented. Common terms in health insurance contracts and types of health insurance coverage are covered in this section. A brief discussion of disability income insurance follows.
The final section of our thesis presents basic information on sample employee benefits for once a student has graduated. Common retirement plans and health care plans are defined. Following this, a brief list of other benefits employees commonly offer is presented.
This manual is designed for a college student to gain insight into their personal finances. It is the hope of the authors that this information will contribute to more responsible financial planning for students of all academic backgrounds.