BY SAMANTHA PANGRAZIO
A Franciscan University associate professor of business presented a discussion in the Gentile Gallery on Monday that highlighted the essentials of personal finance to students.
In his talk, “Personal Finance Wisdom That Every College Student Should Know,” Don Materniak offered vital information on finances in order to help students prepare for life after the money-less college years.
Materniak defined net worth as a person’s total value of financial wealth determined by liabilities (debts) subtracted from assets.
He said, “The name of the game is to get financial wealth to grow. … We’re not talking about greed here. We’re talking about being responsible stewards.”
Continuing on, Materniak said that monthly budgeting is the key to creating positive cash flow, spending less than what is made each month. The goal is to create a surplus and put that money directly into savings, he said.
“You need to treat yourself as a creditor,” he said. “Pay yourself first.”
One helpful tip Materniak gave is to save up three to six months of take-home pay and hold it in a savings or money market account in order to cover an unexpected financial crisis.
Once this is achieved, Materniak suggested investing the surplus created each month into mutual funds, which are professionally managed investment programs in which shareholders can diversify their investment holdings without the hassle of analyzing their stocks every night.
Another subject addressed was the often-controversial topic of credit cards.
Materniak said, “Some people think that debt is a four-letter-word that should be avoided at all costs. … I would encourage you to use debt, but you have to use it intelligently and responsibly.”
He said that credit cards offer the advantage of being an interest-free loan. If a purchase is made the day after the billing date, the purchase will show up on next month’s bill, which means this purchase would not require payment for 60 days, said Materniak. This is helpful for expensive necessities like a refrigerator, he added.
Emergencies, convenience and better protection against faulty products are all more benefits of credit cards, Materniak said. They also help to establish a credit score, which is necessary to have when applying for car loans or mortgages with a bank, he said.
The key is discipline, he said.
When asked about when the right time is to start all of this, Materniak said that credit cards are something that college students can responsibly begin using right now. He said that keeping credit limits low is helpful and shows banks that a person is responsible.
On saving and investing, Materniak said, “If you had enough money to do it, the right time would be now.”
Since most college students do not have enough money, Materniak suggested building up the three to six months of emergency funds as soon as one starts receiving income and then pursue investments.