Page 318 - Keys to College Success

KEY 11.1 Many factors affect how you manage money.

Mathematical and Financial Literacy

Check your spending for purpose. What do you buy with your money? Are the
items you purchase necessary? When you do spend on a want rather than a need, do
you plan the expense into your budget with an eye toward a specific reward, or buy on
the spur of the moment? With a clear idea of what you want and what you need, you
can think through spending decisions more effectively. This is not to say that you
should never spend money on wants. Just take calculated risks that satisfy your needs
first, and then decide what to do with what is left over.

How Your Time Relates to Money
When you spend money from your paycheck, you exchange the time you spent earning
that money for a product or service. For example, let’s say you are thinking about
spending $200 on a cell phone upgrade. If you have a part-time job that pays you $10
an hour after taxes, you need to work a full 20-hour week just to buy the phone ($200).
Ask yourself: Does the risk of the expense justify the reward? If the answer is no, put
the money away and use it for something you value more. Exchange the risk of your
work hours for rewards that matter most to you.
The relationship between time and money becomes clear when you compare how
long it takes to earn money to what you spend on a day-to-day basis. Key 11.2 shows
how reducing regular expenses can make a difference.
Getting a college education is a risk that costs many hours of work, and student
debt continues to rise. However, as Tererai’s choices demonstrate, tuition and time
spent reward you with improved chances of long-term financial success. The Wall
Street Journal reports that education loans, although costly, provide a significant long-

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