Photo Courtesy of: John Morgan
The combination of rising student debt due to continuously increasing tuition and the lack of financial literacy on college campuses creates the need for educators to speak with students about their money and spending habits. There are countless financial temptations during a student’s college career that can lead him or her to a less than desirable financial result upon graduation, and the holiday season can present the greatest number of opportunities to spend excessively. According to the National Retail Federation’s holiday consumer spending survey, the average spending amount for the holiday season is $804.42 per person. In order for students to not fall into the high spending trap that is the holiday season, it is imperative to discuss ways to reduce or eliminate cash outlay toward the end of the year. Here are a few tips to share with students to help them keep their spending under control.
Create a budget and spending plan
One of the easiest ways to keep a tight grip on holiday spending is to establish a budget and subsequent spending plan. A great deal of students work during their college career, but on average, only earn between $7 and $10 an hour, working between 15 and 20 hours each week. You can help students understand how far that money can stretch through establishing a budget and then strict spending limits for holiday purchases. If students know what they can and cannot afford, they will be more apt to hold off on buying gifts on impulse or spending an exorbitant amount of their cash on last-minute travel. Not establishing a budget or spending plan can wreak havoc on a student’s bank account and may mean an increase in credit card debt year after year. Make sure they know the importance of setting spending limits, especially during the expensive holiday season.
Plan out travel expenses
The stress of college makes the idea of going home during the holiday season a priority for a number of students; however, traveling during this time can be incredibly expensive, especially when plans are not made well in advance. In order for students to not put this excessive holiday expense on a high interest credit card, it is important that they have options. Instead of flying home, students may be able to drive and save themselves a few hundred dollars on a pricey plane ticket. If driving is an option, social media can play an important role in connecting students traveling in the same direction during the holiday season. You can easily direct students to join a Facebook group or a specific hashtag through Twitter to find other students on campus to join in a carpool or rideshare, saving everyone money on travel expenses.
It may also be beneficial to encourage students to pick one holiday to head home as opposed to each break in the class schedule. If travel during New Year’s is significantly less expensive than during Christmas, it may make sense to delay the trip for a week to save those costs. It may also make sense to skip on Thanksgiving travels since most travelers end up heading home for the holidays a couple weeks later. Students have a number of cost-saving options for traveling during this time of the year, but they may need some guidance as to where to find them and how to prioritize.
Beware of store financing
Even for the financially savvy, credit can pose a problem during the holidays. The majority of retailers offer deals that seem too good to be true, on items both big and small, and those same stores may also offer special financing options to draw in more customers during the holiday season. It can be all too easy to get drawn into putting holiday expenses on credit instead of paying for gifts or travel outright, and students may not fully understand the total cost of carrying a balance past the holiday season.
In order to thwart the threat of retail credit card spending and the opportunities to impulse-buy, students need to understand the long-term implications of carrying high credit card debt well after the holidays. Once promotional periods of zero percent interest run out, paying off a balance can be a difficult task that most students are not able to financially handle without taking on more debt. Students need to be informed about how these credit offers work with retail stores and be encouraged to use cash whenever possible.
The holiday season is an enjoyable time of the year, but it can also put undue financial stress on students. You have the opportunity to save students a significant amount of money in the short-term over Christmas and New Year’s, as well as the long-term. If students are educated on the financial implications of establishing a budget and spending plan, reining in spending on otherwise pricey travel and avoiding taking on unnecessary credit card debt during the holidays, they will have a greater chance of financial success upon graduation.