In this Q&A, Student Financial Literacy and Advising Coordinator Lewis Deluca Jr. and sophomore business major/finance Noah Falcioni answered 10 questions about the importance of keeping track of personal finances.
1. How did you become interested in finance?
Noah Falcioni: I originally started in accounting. In my first semester, I talked to some relatives who worked in finance; they told me about the kind of things that they did and that seemed more interesting to me than the stereotypical accounting 9-to-5 office job. I like business to begin with, but finance intrigued me more than accounting.
Lew Deluca: My father was an accountant and taught me all about how money works when I was a child. I’ve worked in higher education for many years in admissions and financial aid assisting high school and college students and families with paying for college efforts for more than 25 years. I believe it’s my responsibility to teach Southern students about money, so they are prepared for a lifetime of financial success.
2. Why is it so important to learn about finances?
NF: It’s good to know how to manage money and how to save money and pay for things. College is probably one of the biggest money investments that you’re going to make for yourself. It’s good to get those skills on how to save money and make sure you have balance in your life financially.
LD: I think the COVID-19 pandemic taught many people about an uncertain financial world around health, job security and the importance of an emergency fund. Most are not blessed with financial independence, therefore need to understand FICO scores and interest rates when borrowing for college, cars, homes and more. Money talks in our world and I want my students to be prepared for their financial lives.
3.Around what age do you think students should begin learning about how to build up their personal finances?
NF: I think it’s a good idea to show kids how to save money. 15, 16, that’s the age when you want to instill proper money management. Instilling those values around the time you start working is important.
LD: ‘Sesame Street’ sponsored a program years ago for teaching kids about money using three jars: one for spending, one for saving and one for sharing. This effort has grown by adding a fourth jar for investing. Once students arrive in college and or are working full time, it’s essential to understand long and short-term savings, retirement planning options, and credit score knowledge to set themselves up for lifelong financial success.
4.Is investing in stocks a good idea?
NF: I always think if you have the spare capital for stocks, definitely go for it. The only problem with the stock market is that you have to know what you’re doing. There’s so many different things you can invest in, there’s long term, short term, dividends, there’s also cryptocurrency. I always think stocks are a great tool to build wealth and maintain wealth, but you have to know what you’re doing.
LD: The stock market has outperformed nearly all other investment options over the past 100+ years. Many of the wealthiest individuals invest in the market and have used investing to grow their portfolio for decades. Pension plans are less common today and most people cannot live on social security benefits in retirement, thus need other forms of saving and investing to be financially comfortable in their golden years.
5. What advice do you have for Southern students who want to become more involved with their money?
NF: There’s marketing [clubs on campus]. There’s also Conscious Capitalism, a really unique club here at Southern. If you want to learn how to be conscious with your money, that’s a good club. For any person in general, the best thing to do is go online and do research for yourself.
LD: Start with the basics of savings and checking accounts then transition into credit cards and investing. Understand the FAFSA application and how financial aid eligibility for need based grants and student loans work. Determine loan repayment options in the first year of college (with my help if needed). Apply for as many scholarships as you can to ease the payment process. Schedule a meeting with me to discuss anything money in SSC Navigate.
6. Why is setting a budget so important?
NF: Budgets themselves are a tool in order for you to be able to save money and build more wealth. You have an emergency fund. You need to budget out how much money you’re going to make versus how much you’re going to have to pay in taxes and groceries and other expenses. A budget allows you to have control over your money instead of letting your money control you.
LD: A spending plan can be eye opening to see where we actually spend our money. Most of us have limited resources and need to make important decisions on where we spend our hard-earned money. I teach the 50:30:20 budgeting for spending plans (50% needs, 30% savings, and 20% wants) to allocate money.
7. How can students effectively stick to that budget?
NF: The best way to follow your budget is to avoid unnecessary purchases. Just make sure that you budget yourself enough money to allow yourself to live, but also not have a budget that’s too lenient. Set up a smart budget and analyze how much you spend and avoid unnecessary purchases.
LD: It can be as basic as simple economics: supply and demand. Many Southern students work and pay their own way through college. Understanding the importance of money management for oneself since later in life there may be no financial support from families, and one needs to survive and thrive on one’s own.
8. Are there any apps that you would recommend to students who want to better manage their money?
NF: Banking apps for credit and debit cards. If you do have any spare income, there are apps for investing. I know RobinHood was popular recently. There’s also cryptocurrency and things like that that you can use through apps on your phone. Banking apps and credit mobile apps are going to be really helpful.
LD: Do what works for you and something that is manageable. Most banks or credit unions have a banking app that tracks expenses. Others may prefer an excel spreadsheet or a spending journal while some go all in using Mint.com, which ties all their accounts together.
It doesn’t have to be complicated, rather what one is most comfortable with is my recommendation. There are lots of great resources on our webpage.
9. What are credit scores and how do they help us?
NF: A credit score is a number that’s assigned to you that shows your reliability to pay back money.
LD: Credit is used by lenders for car loans, mortgages, insurance, credit cards, in addition by landlords and employers. FICO, the most common scores, evaluates one’s repayment history so if I pay my bills in full when due, I would have higher credit score than if I were lax with payments. Making mistakes in the world of credit impacts your financial life for at least seven years. How a credit score is determined is not a secret, so if one understands the calculation then one can use it to their advantage.
10. When should you open your first credit card?
NF: Really when you become a student or get your first job. A lot of credit card companies offer student cards. They have some pretty good benefits for students. But for an age, I would say around 18.
LD: High school is a good time to be added as an authorized user on a relative or family friends credit card. Keep the earliest credit card you have forever since it is likely the beginning of your credit history. File the FAFSA, apply for scholarships and use the university payment plan to help pay for college. Every dollar paid with free money (scholarships and grants) and with savings and earnings, is $1 less in loan repayment plus interest.
By: Elizabeth Mercado