Join students of the Financial Planning program at Minnesota State University along with Dr. Dan Hiebert as they share tips and best practices to help you save, manage, and invest money while in college and beyond. A podcast made by students for students.
Daniel Hiebert
08:48
Hello, listeners, and welcome back to map money talks. I am your host, Dan Hebert.
* Welcome again to Episode 5. We got an action-packed episode today.
* with us on this podcast. We've got Aidan Austin and Charlie and what we're going to
do in this episode tonight is switch gears a little bit from what we talked about an
episode four, and talk about probably your least favorite subject, and that's
budgeting. But it's an important part of overall personal financial management.
* Think about budgeting more as cash flow, and how to increase your cash flow, or
just manage your cash flow as you make financial decisions during the year. During
your time here at Minnesota. State
* What you'll find, too, is each of our 3 posts. Austin, Aidan and Charlie all have
different methods on how they do that, and that's fine.
* I think what your goal could be as a suggestion is to listen to each one as they
describe how they work through their methods that they use and maybe just decide
on which one is going to be the best fit for you. If any.
* I think the main thing is to have a system to keep track of your income and expenses
that way. You can find money that's slipping through the cracks. Number One
number 2 is you can find dollars to put towards your goals. What? Whether it be
paying off your tuition, putting it into savings, maybe even putting into long-term
investments.
* You must have the cash first to make all those 3 things happen.
* So, we're going to start it off, and we're going to start off with Aidan.
* Why don't you give our listeners just the download on how you work through your
budgeting?
Aidan Ryan
10:50
I typically take a little bit of a different approach to budgeting. I don't necessarily use
any of these new apps that have become increasingly popular in the last couple of
years. But what I want to talk about just for a quick second before talking about
what I do to manage my money is really talking about what I did before even
starting, and that was sort of the financial goal setting piece that I did before I even
started managing my money watching my money. and as a good rule of thumb, it's
good to keep your financial goals in the SMART category SMART is an acronym. you
want to keep them specific. which a detailed account of what the goal is, and what
you want to achieve. You want to make them measurable. so setting goals that
measure your progress over time.
* You want to. The A stands for action. which includes what actions you're going to
take to reach that goal. the R is realistic the goals should be reasonable. so , winning
the lottery. Probably isn't going to happen. but they're also challenging right. They're
going to take some dedication and discipline over time to reach them.
* and the t is time-sensitive. Your goals should be able to be completed within a
realistic timeline. if you want to say you want to make a 1 million dollars in 3 days.
Well, that's probably not very realistic. A 1 million dollars over several dollars. Okay,
maybe that's something to shoot for.
* So, what I do before even doing anything. I write down a short-term Goals? and I
have one or 2 goals, maybe even 3. And then I write down steps to completion. And
when I review these goals, I make sure that they're SMART, which stands for a
specific, measurable actionable, realistic, and time sensitive. So, I have. I use it's
what I write my goals on. and I'll have that uploaded for the listeners out there.
* The second thing I want to talk about before you even doing anything. Is I track
every dime or cent that is spent or received in sort of a spending log?
* I do not like not knowing where my money is. I'm one of these people that is
checking my bank account probably 3 times a day, just to make sure everything is
still adding up. So, I have crafted a spending log that I use myself every day, and it's
just a word document - very simple. You can print it out. You can use it in word. I
Personally, I like printing mine out, and actually having to write down what I spent
money on it. It gives you a second to look at. Did I really need to spend that when
you actually physically write it out. I try to stick to the necessities. But anyways,
that's a great way to track your expenses and see on paper and in in front of your
es. What exactly is coming in and going up like, Dan said, this is a lot of cash
management and putting everything in the right place and trying to maximize
profitability. Now for me personally, my the way I track it is through an excel
document. very simple. I just track what comes in what comes out, and what I do at
the end of every month is I track how much money I've spent, and I break what I
spent in the categories with college. It's a little bit variable. but when I work on I've
really worked on trying to, we talked about in one of the earlier podcasts. Food is a
big thing I've really worked on trying to save and be by the most affordable
groceries and the with the least amount of money. I'm not trying to buy things I
don't need, and just everything I purchase goes through about 3 cycles of thought,
whether I this is a necessity or it's a want, I mean in college. It's very hard to really
separate the wants and the needs. you need food to live right. That's obvious. But
you might not need to go out to an expensive restaurant or get fast food multiple
times a week, There's a lot of tips and trips, short tips and tricks to save money
* and things like that. So, the really, the way I do. It is just the excel document. I plant
everything that goes in and out, and I keep track of in the spending log that I write
by hand, and I just try to stick towards my financial goal setting log.
Daniel Hiebert
15:08
That's fascinating. thanks for breaking that out. A couple of questions for you. So,
you start to by outlining your goals use the SMART method, which is a tried and
true method for sure. if I could ever add anything onto the SMART method. it would
be, maybe to think to maybe about your objectives. Why are you saving what's that
look like for everyone? What are you trying to accomplish with your dollars?
And, as you say, both short term and long term?
* Question. I just want to make sure from a clarification standpoint. So you put your
goals you put that into a word document. But on your expenses as you break them
down by category. You use an excel spreadsheet. Did I hear that right? Or do I have
those mixed up?
Aidan: I write financial goals just in a word document. And then I have a little
spending log that I print out. I've got like about probably 100 copies just in my desk
drawer, and I write down every time I spend something. I write down what I spent it
on, where I spent it, on how much it cost, and the method of payment. whether it
was credit card, debit card cash, whatever it was. that just helps me visualize my
expenses and see how much I'm spending the excel document really is something I
update at the end of each month. So I take what was in the spending log, and then I
I balanced it out with how much I made through various jobs or whatnot and then
that gives me like a summary of the previous month of what just happened, so I'm
getting ready to do it for December.
* It's early January. I'll get that done, but I just collect all my spending logs on paper.
It's just the easiest way for me to do it. It can be done digitally as well. there's a 1
million things that will track that expense for you, and things like that. But for me
it helps me save the most money and understand my expenses more if I visually
see it on paper, and I have to physically write it down
Daniel Hiebert
17:02
Gotcha, and, as you say we'll have it uploaded to our web page. so you'd be able to
check it out there.
* I also really like how you described, or just gave the perspective of food.
* Probably you could go to Sam's club, or Costco by a 50lb bag of rice, for I don't
know 10 bucks. Maybe you could live on that for a month. I don't know. but you
have to. Also, just think about? Is that the most effective way of eating? You must
eat to live but there are some boundaries that. You want to make sure that you stay
cognizant enough, and I and I love the fact that, watching where you go to eat.
* Eating out dining things like that I just keeping at it at a minimum and what would
you say to? Maybe you could have like a short-term goal if I could save this much
this month, and I could treat myself to. having a decent meal at a nice restaurant.
Is that something that you ever factor in, or is that out of bounds
Aidan Ryan
18:09
I don't usually do that. I'm. I'm in the process of just trying to. I Occasionally I will
make like a larger expense. I will do that. I usually at the end of the year, if I've really
been proud of myself for saving money and doing that, or working really hard. Then
I'll think, okay? Well, I've been wanting this for a year. I'll get it. but I'm one of those
people that really like do I really need it? I think 18 times back and forth before I
make the purchase. So sometimes I just must pull the trigger.
Daniel Hiebert
18:40
Gotcha good. Well, thanks for breaking that out for us in Austin. Charlie, you have
me questions before we segue over.
Austin
18:51
No, a great job.
Charlie Frazzini
18:53
He's made some great points, and I think I can build off him once it's my turn to. Tell
how I budget.
Daniel Hiebert
19:04
Good. Well, it might be a good segue over to Austin.
Austin
19:11
Perfect, thanks, Dan.
Daniel Hiebert
19:13
Take it away.
Austin
19:15
One of the biggest tricks within finance, or one of the biggest pieces of advice you
could give a person is. Don't spend more money than you make and when you tell
someone that they seem astonished, but it's really that simple when it becomes
down to making a budget.
* Aiden spoke on excel, which is starting to be more of an ancient way of budgeting.
But good for him. I'm also going to collaborate on another older way in quite simple
way of budgeting, which is on paper.
* So, what I do is, I use an app. It is called every dollar. What every dollar meaning is it
wants you to take all the money that you make, all your cash flows. and you want to
give every dollar a power to do something. You get the power to choose where you
spend that money. Where, when people here budget, they get a little antsy, because
they're like. That means I can't spend any money where sometimes it means the
opposite. It means you get the power to tell your money where to go, because a lot
of the time people get to the end of the month, and they're like where the heck did
all my money go.
* But what by Budget does. Is it gives you the power to say, Nope, this is going to go
here. This is going to go here, and I know exactly where it's going. So, with what I do
with my budget is, I use every dollar, and it's nice, because at the beginning it has an
income category. So, you type in what you're going to plan on getting an income for
each paycheck or for that month. It can be a food or whatever you're pulling out to
spend. You just put down your income. and then it gives you a pool of money, and
then you're able to divide it out within the categories. You can do the same thing on
paper. You can write down exactly how much you're going to make that month.
* A lot of people say, Well. I don't really know how much I'm going to make this
month. But I think you do have a good rough idea, and if you don't, you really just
want to go on the lower end of it, because always better to make a little more than
you plan on. So, you put in your income, and it gives you a pool of money. So, if I put
in a $1,000 at the top, it says, I have a $1,000 left to budget. There are 3 things you
can do with money. You can give it away. You can save it, or you can spend it. That's
really all you can do with it. So, there's right away. There's a given category.
* So, if your heart desires if you have a heart for giving, you're able to put down how
much you want to give. And then what I do is I go to my biggest expenses for me.
I'm in college. Most of us listeners are in college, or we're playing for rent housing or
mortgage. So that's my biggest expense personally. So I go out and plug in my
mortgage, and that so if my mortgage or rent. So, if my rent is $500, it pulls $500
out of that budget. So now I have my remaining money to budget. And then I go.
We talked about goals; I have saving goals. So, then I prioritize saving second.
* So after putting in my rent, I put in my savings. And then, after that, I have
* everything else just to spend on myself whether that's for gas, for food, restaurants,
subscriptions, miscellaneous lifestyle health, whatever those are. You're able to go
and plug in, and it pulls out of that pool of money, and you can do the same thing
with on paper. And then, after what's really cool about this app is once you kind of
go out and put down what you want to spend after you make a transaction you can
go out and put it in there, and like what Aiden was talking about it, logs it for you.
* So, if I had plan for spending a $100 in gas, and I just put $30 in my tank after I go
and fill up. I can put that into my gas category, and it automatically refreshes. And it
says you have $70 to spend on gas. So that's neat, because that way you can see
everything that's adding up, and it adds up quickly, and after a couple of months of
budgeting, you're going to realize, hey? I'm probably spending too much on gas
station cookies or donuts, or I'm spending too much going out to eat every single
day. I've spent 90% of my income on just going to grab fast food instead of meal,
prepping or bringing left over to work or school, or whatever that looks like.
* So I'm a really big advocate in the budget, because it just really gives you the power,
intentionality, and ideology on where your money is going.
Daniel Hiebert
23:50
That's awesome. And again. It's just interesting to give it a different but good
perspective than what we heard on Aid. I really like how you broke it out between
those 3 categories about how you can put your money into all those 3 different
places. That makes a ton of sense. And I think, too, when you were describing that,
and also describing more behavioral aspects to money is really what I took away
from how you described it. There's a movement called your money or your Life. I
learned that years ago it was a book I rout, and they've got no website and all those
things, and I still go back to it occasionally, and to what you're saying about money,
and how you're spending it. What are the priorities that we have? What's going to
be the priority? That's right for me. And so, you'll find that you really look at your
money differently when you think about priorities. And is this going to make me any
happier? And you'll find that a lot of things you can just cut out, because it's just
really a waste of money. I'm not sure if it's exactly what you're saying, but that's
really one of the things that I took away from that. So, thoughts on it?
Austin
25:09
And to collaborate on what you're saying earlier on between like giving yourself like
a reward like you're asking Aidan. That's a nice thing about this budget is because a
lot of people maybe save too much money, and they don't spend anything on
themselves. So, they're able to put, make, maybe a fun category or a close category
or something, and like, set aside a little money to be able to treat themselves.
Because, like I was saying earlier, you can only spend it, save it, or give it. So you
want to diversify between those 3, And what, personally, what I do is I like to stay
consistent within my savings, but then I like to pick a month, and just do like a no
spend month where I don't spend anything extra on myself that isn't like mandatory,
and just throw that all into savings, and that like really gives me a nice little boost
within the savings account. So that's been just fun thing that I like to do. And then
the next month it'll be like a spending month like, okay, I'm not going to save
anything this month. I'm going to count since I really put away my nesting. my nest
eggs last week or last month I'm able to spend it on myself this month.
Daniel Hiebert
26:15
I think that's a great way of going. And like you say it's not you. You don't have that
feeling of being deprived of something. I think, just one different aspect, and I think
together with you and in your talks, is really it's keeping track of money. It's keeping
track of expenses. But there's also some behavioral things in there. As well, so it's not
just about finding the right trick to save money. It's really more of a behavior Change
and you can do it. and you'll be better off if you do it. But it might take some
discipline. I'm not sure if you agree with that or not. But just having that discipline in
order to keep track your money, but also goals. And once you reach those goals,
maybe treat yourself a little bit. I think it's fine.
I got a question. So, do you invest? And if so, how much do you allocate? Is that like
a percentage of your cash flow, or is it just once you've figured out your expenses
for the month? Then you just put the rest towards investments. So how do you do
that?
Austin
27:32
Right now in the stage of life I'm in college, and we're making this podcast towards
college students. So right now, with up my cash flow, and what I'm sustained to right
now is my education. That is my biggest investment right now. So all of my
investment dollars are going into tuition. So, what I do is I look at how much my
tuition bill is going to be for the next semester just throw out a random number. Say
it's not a $1,000 to say it is, and I have 10 months to save up for that I divide that by
10, and it's like, okay, I'm going to prioritize a $100 of saving every month. So that
way. I know I at least got my tuition bill next semester said for. But I think there are
lots of rules of thumb, and with all of Dan's experience he can probably say that
there's probably more templates and rules of phones that you've seen. I've heard 15
I've heard 20, but it just depends on the person and what you're able to do.
Daniel Hiebert
28:29
No, that's a great question. You're right. It's a rule of thumb. And you're right, too.
That it really depends on your circumstances. If you're way behind on your goals or
your goals, or fairly large, maybe 15 to 20 might be the right number, but if there are
more. maybe reasonable, isn't the right word. But, maybe a little bit more
reasonable, maybe 10%, maybe 15%.
* One of the things we teach in our retirement. Planning class is a is a movement. You
can. Guys can go look at this right now. It's called the Fire movement "financially
independent Retire early" It's a movement, but that's out there. You can go and
Google it. Those people that belong to that movement. They're saving 50, maybe
75% of their paycheck, because they want to retire at age 35, and 40. So again, it
just depends on your perspective. It depends on your goals. one of the things to
just throw in my own version. My wife and I were just talking about this to Austin's
point. What we do, when we first got married? We did budgets, and we kept track,
and I think, as time went by we adopted this thing called the automatic millionaire.
It's a great book. If you, if you want to read it. What happens in that is, you basically
* pay yourself first. So, you put money into, like you say, Austin, into an savings
account for your tuition, because that's your priority, right? And you just
automatically, just automatically comes out of your checking account. Hopefully, it
will bounce. But just comes out every month out of sight out of mind, and you just
live on the rest, and you just figure out how to live on the rest. for those folks that
don't want to take the time. So, keep track of every penny. I'm not saying you
shouldn't, that's it's a good approach. If you want to do that. But this might be
maybe an alternative. and it's not perfect, either. You're going to have to have the
discipline to make sure that you're able to live on. What whatever else you haven't
saved. But just another alternative.
Aidan Ryan
30:45
I want a quick comment on what you just said Dan, too, about the discipline. I think,
when a especially as a college student, having the view of money that I guess the
average college students view of money. I think everyone's really a little bit
different, right? It's. It varies from person-to-person case to case but having the
discipline. It's not always going to be super awesome when you're saving money,
,like what also is just saying, when I is setting away money for tuition and etc. It's
not necessarily fun. I don't like having to get, . I would much rather was that a music
store today, buying guitar strings, and I see this beautiful $800 guitar. I'm like Wow!
that'd be cool. Well, I don't really. need that. So, it's going to take the discipline to
not do that. And it's the rule of thumb that they got the person that saves the
money now and has the discipline to consistently do so will be set up better
financially in the future. It's, I mean. A good analogy is going to the gym right. You
go to the gym few days a week. You're going to be much better off in 5 years than if
you go to the gym every so often when you feel like it. So I think that the discipline
and growing that discipline is really instrumental in especially a college students life
and in money management
Daniel Hiebert
32:01
Totally agree with that excellent point. Discipline is super important. I'll say this to
the tag along saving money- it's a discipline, but it's impossible to put a price on
peace of mind financially to know that you've got your goals. You've got money in
the bank. You've got your investments plugging along. It's just an incredible feeling
and all that. It's just the easing of your stress level. And I can just tell you from
working with clients that are that don't do that. Their lives are sometimes miserable.
They are worrying about every penny. And if you can just have that discipline now,
and save and make good decisions. You'll just have that peace of mind. It's just
priceless. And it just priceless. Thanks, Aidan. Appreciate your perspective on that
last, but certainly not least. On to Charlie:
Charlie Frazzini
33:03
Thank you, Dan. So I have a different approach than Austin and Aid, but similar to
Dan- that millionaire automatic millionaire approach you're talking about. So I don't
use a tool or like an app something like that to track every dollar that I spend. I try to
focus on getting rid of the bills, the monthly expenses that I have paying them down
and then maybe eating out once or twice a month, and then the rest is, just
discipline. I've always been blessed with the ability to be disciplined and not spend
when I don't need to. So, what I like. I don't like shopping at all. It's just something I
don't enjoy doing and so I don't have the wanting to go out and buy something
when I don't need it. I just try to pay for what I have my gym membership like car
gas stuff like that- food and so on. And so, for the rest, I do try to meet some
monthly goals which are first. I tried to spend about $200 with my credit card every
month. it's not a lot of money. And I do it just so I can build my credit. It's not like I
need the money on the credit card. I just do that so I can build credit, and I'm
purchasing things that I already need like gas food stuff like that, and I just try to do
$200 with that. Another thing I do is I take about $20 a week for investing. I'm
viewing it right now as practice for once I have. My cash flow, maximized, and I have
a full-time job. It helps me practice with investing, as well as maybe building
something for the future even though it's $20 a week right now it can grow into
something much bigger once you stay that course. And I know this style of
budgeting is very tailored to people who have a lot of self-control when they're
handling the money, and it's not for everybody but if you can do that if you can just
pay for what you need, and not have the urges to go out to eat. And by random
things I think it can be a great method for you and another huge part of this a big
component is maximizing cash flow. So, you still have expenses, and you want to
come out as much as possible, so I always try to work as much as possible in a way
that fits my schedule within school, or just life itself. So, when I'm in school I work
about 15 h a week. and just try to have some saving money. So I can afford my
expenses, and then, when I'm on breaks, winter breaks spring break as a college
student, I try working full time 40 hours a week. That's just part of my character,
too. I don't want to be sitting around so if I have no school, then i'll look for other
things to do like work. And if I'm not working, I'll figure out something else to do. So
just my personality, I guess, has allowed me to be successful. With this, the ability to
be disciplined- not having urges to spend money in places that are not necessary.
* That's all. Help me, and I can see, wanting to create a budget using, excel, or write
down paper, especially if you have a lot of things to keep track of, if you have a
mortgage. If you have, health, insurance policies, life insurance bills- all that stuff. I
can see myself going towards that model in the future. But right now, I feel like
my life is simple enough where I can just take care of my expenses and coast from
there.
Daniel Hiebert
37:50
* I think again, just looking at some common denominators between what you just
sAid, Charlie and Austin and Aiden are, the value of setting goals. So why are you
saving what's the purpose? What are you trying to achieve with your money?
Having the foresight and just sitting down to just saying, hey, what are my goals
for short term? What are my goals for? Long term? And then having the discipline
to either: If you want to track every penny, which is, if that's your personality. And
if that's going to make you if that's going to put you in the position to make good
decisions. Go for it if you wanted to do. Maybe a little bit more of what we're
going to call the automatic millionaire where you're saving. You set your savings,
go to your saving amount and then just having the discipline to live on the rest. If
that's your personality, do that as well. I guess the main thing is just having the
discipline to make sure that your cash flow stays positive, and I can fund some of
the goals that you have. So there's some takeaways. Those would be the two big
things. Anything you guys want to add on to that or just comment on thoughts
before closing our session?
Austin
39:19
Dan, like you said, the name of the game is just having goals, and being intentional
about filling up those goals. You got to understand what's important to you. What's
important to me might not be the same as Charlie or to Aidan. But if I prioritize
those things, your financial well-being will be taken care of, that's for sure. You just
got to be mindful of it and just keep track of it.
Charlie Frazzini
39:42
One takeaway that I have is even though you don't have money as a student,
because most people who are listening are college students, even though you don't
have that cash flow that you would have as a full-time employee right now. These
are just foundational goals and just things that you can implement right now that
will help you succeed in the future. I know that most people aren't really swimming
in cash right now, and they've got a lot of bills tuition stuff to take care of. But if you
can really nail it down right now and get your discipline saving habits budgeting
down right now. It'll help you so much in the future. Once you have a lot more
expenses and more cash flow. So that's my takeaway right now.
Daniel Hiebert
40:37
Good and along those lines. It just had this in my thought as you were describing
that Austin and Charlie, I had this student in one of my classes, and she would
always come in with a latte from Caribou. And you tell me how much those things
are right now. They're probably 5, 6 bucks right. Well, now maybe 7. Well, I see you
enjoy your latte. But how about if you just make it at home? We do it at our home.
We've got a latte maker. It's what that time it was 20 bucks I'm a cold press coffee
drinker, I, instead of buying it. And again paying 4 or 5 bucks. I just make it at home.
Honestly, I'd like it better. It tastes better. But there, you can still have an enjoyment
of something without. And just being a lot more SMART about where your dollars
are going to and heck you. If you buy the equipment to make your latte, or if you're
like, the cold press, you pay for it. I don't know 3 or 4 times 3 or 4 trips, and you've
already pAid for it. And then the rest of it is just money in the bank.
Charlie Frazzini
41:52
I think we can make a whole. Another podcast for the unnecessary expenses. People
do, like coffee supplements, gym memberships. There's things that are just crazy like
I personally go to Soldiers black coffee every day, and you can get. I don't even
know how many servings for 10 bucks and that saves you hundreds of dollars it-I
don't know it gives me. It's just the sick feeling honestly to think about all the money
that I've lost after.
Daniel Hiebert
42:26
I will lose potentially if I spend money at one of those Starbucks car boot places.
And gym membership, instead of spending 160 bucks and just get a Nike app.
What's that? 15 bucks a month and just do some boot camp workouts probably
better for you, anyway. I think everybody knows the $160 a month Gym
Membership
Charlie Frazzini
42:51
And a home gym- that's another thing you could really get into. That can save you a
lot of money over a year if you're paying for gym membership. If you can invest in
some equipment there you go.
Daniel Hiebert
43:07
It's done it for me, You're right. That will just give us some good segue into a future
episode. Well, that's all the time we have for today, any parting thoughts before we
close-up shop.
Daniel Hiebert
43:30
Well, thanks again everybody for listening. Much appreciated. We'll have a great
episode 6 coming up shortly. So, stay tuned for that.