Finance professor offers tips on budgeting

Charles, LA., junior Elle Simmons poses at Common Grounds. Simmons said she found the transition from living at home to living on her own a difficult one, but she does her best to keep her finances in check. Photo credit: Baylee Versteeg

By Thomas Moran | Staff Writer

A large portion of Baylor students face the growing challenge of funding their college educations without fully sacrificing social engagements and reasonable standards of living.

With the cost of attending four-year universities increasing annually, financial stress is becoming as prominent and widespread an issue as the academic and social stress that go hand-in-hand with Baylor’s competitive environment.

According to Dr. Franklin Potts, professor of Finance Department within Baylor’s Hankamer School of Business, the solution to this and related financial problems facing students is clear—a well-developed budget.

According to Baylor’s website, the cost of attendance has exceeded $60,000.

“When I started college [at Baylor] in 1967, a semester credit hour was only $25,” Potts said.

Having had the opportunity to teach students of a diverse range of majors and backgrounds, Potts said that skills associated with financial literacy are often lost on Baylor students, regardless of major.

“Most people don’t have a budget,” Potts said. “They just spend randomly. Unless you have a plan for keeping your expenses below your income, you’re generally not going to save much of anything.”

Some college students view their lack of income as justification to avoid budgeting or neglect keeping close track of expenditures during the school year.

However, this is one of the many fatal common mistakes that young people make today, Potts said.

“Have self-discipline,” Potts said. “I have many students who come to class every day with a Starbucks in their hand. That’s five or six dollars everyday … It might not sound like a lot, but it adds up,” Potts said.

Maintaining a casual mental budget is a common practice among many students. However, budgets almost always fail unless they are written down, well-organized and realistic, Potts said.

Like many students, Lake Charles, La. junior Elle Simmons said the transition from her home to Baylor was abrupt and becoming financially literate was a difficult but essential learning process.

“Depending on your situation as a student, many of us are dependent on our own income or are weighed down with the idea of having debt or preventing having debt when we enter into college,” Simmons said.

Simmons has begun implementing a more concrete budget throughout her day-to-day life and, while it can be limiting in some ways, she said having a budget has offered emotional and financial peace.

Simmons said she plans her spending down to the letter including grocery money, coffee trips and any expenses she has.

Living within your means, minimizing unnecessary expenditures and having a concrete written budget are among the best practices that students can utilize to become more financially efficient, Potts said. Financial literacy and wise decision-making early on can lead to financial security later on in life.