Do’s and dont’s

Many young people have entered their final year at school and preparing for exams that could see them going on to college or university, or starting work with employers a long way from home. It’s an exciting time — you’re looking forward to freedom — and more money than you’ve ever had in your life. A month into university and money from the parents or the grant — if you’re lucky to receive one — has nearly all gone; you’ve had to find a part-time job just to keep going in your class, and you’re too tired to study because of the night shifts in the fast-food restaurant. Equally, you can’t work out where the first salary cheque has gone. One of the biggest challenges of going to university or starting a job away from home  is having to take responsibility for your bills  for the first time, which can be tough as your parents have probably taken care of everything until now.

In theory it’s simple. You work out how much money you’ve got to start with  —  how much you need to spend on accommodation, utilities, food, books and the essentials each month — and then use the rest for having fun... basic accounting really with income versus expenditure. But the one cry that’s heard around the world at the end of the first term away is .... I’ve already spent all my grant. Perhaps buying the new music system, mobile phone, TV weren’t the best possible use of your cash, after all. And the trips to the coffee shop and nightclubs can’t have cost that much, surely. So what can you do if parents can’t help? Here are a few tips: At the start of term or with the first pay slip — when you’ve got all that money you’ll need to put it somewhere.  Under the bed, in the sock drawer or your ‘Finding Nemo’ china bank are not among the top ten options.

Looking for a bank or financial institution can be a daunting and puzzling exercise...  but it’s important you spend time on this — its probably more important in the long run than your first essay. Here are a few tips in choosing the right bank or financial institution: Consider how each institution treats you. If they’re smart they’ll give you good treatment in order to encourage you to stay loyal when you’re a wealthy executive — and not the starving student asking for help now. Look for a financial institution that does not have large service charges and transaction fees. Some institutions permit a certain umber of transactions per month without charges. Ask if you will be charged service fees if your balance falls below a certain amount. Shop around for student deals or discounts. 

Check to see which financial institutions have cash machines on campus and near where you live. If you are constantly using another institution’s machines, you could pay extra service charges over the year. Also look for a bank with convenient locations — this is important if you do not have access to your own transport. Financial institutions offering online services may save you money as there may be financial incentives if you make on-line transactions. Remember that if you’ll be dealing with a financial institution for the next three or four years, you should pick one you’re comfortable with. If at any time you feel you are being treated poorly or overcharged, ask to speak to a manager. If you’re still dissatisfied, switch to another institution. Chances are they’ll be happy to have your business. Many students are tempted by credit cards, but they can be the downfall of many. They offer excellent convenience and can sometimes save you money, but they can lead you into debt. Use them poorly and you’ll pay. Use them wisely and you can benefit. If you have any doubts at all about being able to use them without problems, avoid them.

Credit card companies are sure of one thing: the easier it is for you to use credit cards to buy products and services, the more likely you are to make those purchases. So, how can you use credit cards to your advantage? Obtain a card that charges little or no yearly fee. Shop around for your card. Never choose a card based solely on incentives or reward programmes. These include auto reward points and air travel miles. These “rewards” may lead you to spend more money than you can afford.  Stick to one or two major cards and avoid store cards, which often charge an interest rate six or seven points higher than the major bank cards. Always keep a list of your card numbers written down in a place separate from your cards. This way, if your cards are stolen, you can cancel them immediately. To protect yourself from impulse buying, you can lower your spending limit. You’re better off to keep it at a manageable amount (an amount that you can easily pay off every month). When you make planned purchases of things you really need, a credit card can be great if you promptly pay it off in full. If you’re a confessed window shopper, leave your credit cards and chequebooks at home when you go “just to check out the new spring line.”

With strictly cash in hand, you’ll be much less likely to succumb to those impulse purchases. Some basic credit cards will automatically extend your warranty on purchases by up to an extra year with no cost to you. For computer and other electronics or appliances, this can be valuable. To get the maximum benefit from this feature, charge it and pay your card balance off in full. Never use your credit card as ID. Use your driver’s license or student card instead. People can easily use your number over the phone to make purchases. Most important of all, pay off the complete balance monthly and escape interest charges. If you are lucky enough to get a part-time job to bring in extra money you must ensure that you know what taxes you’ll have to pay and what rebates you’ll be entitled to. You need to establish how much you can earn before you are taxed — and the rate at which you’ll be taxed once you become eligible. The local tax office will help you with this information, and will provide the forms you must fill in to avoid problems later.

ACCA (The Association of Certified Accountants) is the largest and fastest growing international accountancy body in the world. We currently have almost 320, 000 students and members in more than 160 countries. The organisation has over 70 offices worldwide, including a Caribbean office based in Trinidad and Tobago Comments can be sent to: info@wi.accaglobalcom.