How To Budget Your Refund

this program you know at Penn we are very excited to have you all here first and foremost i hope that everybody’s semester is going well and that your family is doing great to begin i am Hatef Alavi associate director of Penn first plus i oversee all the programming events on you know for Penn First Plus and i also work with our colleagues over at srfs to address any students concerns um that has to do with their financial uh you know um issues i also want to thank our colleague over srfs in addition to Penn Cap for this collaboration uh we hope that you gain as much information as you can regarding ways you know ways in which you can manage your financial um duties um next i want to introduce um keisha johnson thank you hatef hello everyone welcome to our workshop i’m keisha johnson and i’m the director of the pre-freshman program and i wish you the best as you’re in week four i believe of the semester um and i’d like to pass it over to jen from Penn Cap hi everyone thank you for having me today i see a lot of familiar names so welcome students it’s so nice to see your names i i am jennifer toadvine the head academic counselor here at PennCap i’m actually going to ask you nick to also introduce yourself before we go to john yeah hello everybody and welcome my name is nicholas matthews and i’m the graduate assistant for the Penn First Plus program and i’m getting my master’s in counseling mental health services just here happy to be a resource any way that i can i’ll go next hi everyone my name is john hagerty i’m the associate director for the undergraduate financial aid program here at university of pennsylvania and student financial services and i work very well closely with all these people to to address concerns that students have on a daily if not most weekly basis so it’s good to see you all here great um hi everyone my name is Lindsay Burcham and i’m the financial wellness program manager so thanks to Hatef for organizing this workshop we’re really excited to talk with you all today about student account refunds and some strategies for managing them and throughout the presentation i encourage you to send questions in the chat there will be a few places where we pause to take questions but we can also take them at the end so we do have this introduction slide but we’ve already gone through it but again john and i will be presenting today john more on the financial aid side and i’m going to talk more about um how to budget um and you know just to preface this i also want to share i am a FGLI Penn alum um and so i was a highly aided student and i did a lot of this when i was in your shoes so i’m always happy to talk about this from my professional role but also happy to talk about my experience as an alumni if you have any questions as well so first i’m going to start by talking a little bit about the financial wellness at Penn program in case you haven’t engaged with us before so our program launched in january and you can read our mission statement on the screen but broadly speaking our goal is to help students understand how to manage their personal finances not only now but also in the future and given that our mission is education based i do want to provide a disclaimer up front that financial education doesn’t solve all money struggles financial education can’t fix poverty or repair damage caused by years of economic injustice again as someone who was a FGLI student you know i budgeted weekly and that didn’t make me less poor at the time so i just want to acknowledge that we’re going to provide you with some great insights for how to manage your money today um but we recognize that it’s not going to solve every issue and that’s okay we want you to know how to manage what resources you do have available to you so we like to start every presentation by outlining the goals we hope to achieve throughout the course of our time together so first john’s going to talk to you all about the financial aid process and what circumstances lead to you receiving a refund and some of you may know this already but it’s going to serve as a refresher to help you sort of contextualize the rest of what we’re going to talk about today and then we’re going to talk about some potential strategies for how to actually budget your refund and how to manage it throughout the course of the semester and we’ll also identify some options for implementing that budget so i’m going to hand it over to john to talk about student account refunds to start again and thank you Lindsay but again um try to just go back and refresh uh clear your head about how you might understand about how refunds work even if you do and just kind of let’s go through this process together to get an understanding of how how this actually works for you on a more specific level so why do

students receive student account refunds um it’s based around a lot of factors but here’s here’s where we’re going to start we’re going to start with the cost of attendance and the the different types of of cost of attendance that we have uh for students specifically i do want to highlight that this cost of attendance, well your cost of attendance could look different uh than this uh depending on the year that you’re you’re in uh these are the the build expenses and anticipated expenses that you’re going to incur for this academic year so next year might look different the year before that might look might look different from this um your total budget is what’s used to create your financial aid package so depending upon whether you’re living on campus living off campus or living with your family uh your cost of attendance is going to look different and your costs are going to be different around that as you as you can plainly see here from the breakdown the expenses that are marked with asterisks are billed expenses to you which means that penn will bill these charges to you the ones that do not have asterisks next to them are things that we understand you’re going to incur as expenses as students here the one thing i’ll point out is books and supplies for instance you can see that that that that expense remains equal across the board and because whether you’re living at home on campus or in an off-campus situation we assume that your book costs are going to be relatively the same for the academic year and so those are things that necessarily build to you although you do go to the bookstore and you are billed there for that book we do not bill you as a university for those books and those expenses do vary um throughout each semester so it’s kind of hard for us to bill you for that very specifically so again we have the tuition fees housing and dining which are generally those build expenses that the university charges you and then you have your unbilled expenses the book supplies transportation and personal expenses which could be uh something like toiletries for instance those are things that we expect you’re going to incur as as costs to you to be a successful student and person but you’re not being charged for those specifically so hopefully this helps you understand sort of what the cost of attendance really is and the difference is basically how you reside on or off campus or not um so that’s the breakout for you there next we’re going to talk about how we’ve packaged your financial aid award around that cost of attendance so what we do in student financial services more specifically with our needs analysis uh committees is we take a look at the application you’ve submitted you’re going to submit to us the css profile the FASFA your parents tax information and the Penn financial aid supplement every year for financial aid consideration that is a wealth of information and documentation to show uh show us what your family’s ability to pay our char our cost of attendance each year right so we take all that information we derive an estimated expected family contribution for you and your family for one academic year based on all the information you’ve supplied us so we take that estimated family contribution the efc and we subtract that from the the cost of attendance that you are currently under and that is your demonstrated financial need we meet that 100 percent with grant funding and combination of that with work study so that is essentially our packaging process uh we’re assuming that your family can pay so much of what we’re what your cost of attendance is going to be and we subtract that from the the cost of attendance so that’s that’s where we derive our packaging strategy there and hopefully that that makes sense we’ll go into that just a little bit as we go further here so again your bill expenses are applied to your account as positive numbers and your grant funds are applied to your account as negative numbers very simply um the remaining amount is what you owe or what you will receive so again positive balance means that you owe money to the university and a negative balance means that you’ll actually have a refund pending and credited to you very simply that way your seo student account refund where your grant funding exceeds your build expenses again that negative balance means that you essentially overpaid the university and you are due to receive a refund whether it’s grant funding whether it’s a combination of an outside scholarship with our grant funding might be a name scholarship any amount of funding that pays to your account that overpays it will provide you with a refund okay so let’s review an example that that demonstrates this here’s a refund example um essentially let’s look at the cost of attendance on the left there first you see all of your build expenses and your unbilled expenses and that is your total budget at the bottom there we then derive your financial aid package which includes work study in this case a pell grant in this case also a name scholarship and then of course a Penn grant we then place the efc in there to meet that total budget again the efc is your estimated family contribution this is not

some sort of grant funding this is what we expect your family to contribute towards your uh expenses for this year now we can see that the tuition fees that you’re being charged the Penn grant i’m sorry the pell grant your name scholarship and the Penn grant exceed those charges to you and in this case likely because the housing is off campus you’re going to receive a negative balance of over ten thousand dollars as you can see at the bottom there this ten thousand dollars and this again is for the academic year when we when we bill or i’m sorry when we produce a financial award in your cost of attendance it’s for the academic year so likely this negative balance will be in half one half of the fall term one half of the spring term and total you’ll receive over ten thousand dollars back in this example this is money that comes to you directly and you can sign up for direct deposit to go to whichever account that you you you determine or it will go to you by check to whichever home address you’ve listed on your your account and so then here is ten thousand dollars in your pocket and so really what then do you do with it because even for someone who’s considered to be an adult like myself that’s a lot of money um so we want to make sure that you’re going to be using that money correctly uh making sure that’s going towards those expenses you see on the left there that are not filled by the university and how do we do that um so i’m going to hand it off over to Lindsay at this point help you understand great thank you john so now that you know where the money comes from it’s time to make a plan to actually manage it like john mentioned and the reason we’re talking about budgeting a refund is because these funds are intended to help you cover the academic costs that are listed in the cost of attendance throughout the entire semester we want to make sure you have these funds throughout the entire semester so you can cover your needs as they arise so first we’re going to talk about general budgeting before we talk about refund specifically and this is important because your refund probably isn’t your only source of income like john mentioned you should also have your expected family contribution to go towards some of your costs as well as a work study award if you’re working this semester these will help you cover some of those unbilled costs that john discussed additionally i want to highlight that regardless of the income source or source is budgeting has the same steps all the time so incorporating your refund into your broader budget will help you make a plan to cover all of your educational expenses and any non-educational expenses you have so i also want to take some time to just clear the air about budgeting i think folks can be afraid of that word and feel anxious about it a budget is simply a plan for your income and expenses it doesn’t have to be restrictive it doesn’t have to be time consuming a budget should be whatever you need it to be in order to best keep track of your cash flow so we always approach budgeting with these six simple steps that are listed on the slides and i’ll walk you through each one of them so when you start budgeting we always want you to start by tracking your income and expenses for about a month and we say about a month because that tends to give you an idea of what sort of habits you have with your spending and earning now if you and we’ll talk more about implementation later but if you go the route of using a mobile app you may be able to skip this step um when you connect your bank account to the mobile app that you’re using it will often auto import some recent spending and earning data and that may give you some of these trends without you having to really put any effort into it if you want to go the manual route and use a sheet of paper or a spreadsheet you’ll want to take note of all incoming and outgoing funds for about a month and keep track of these um amounts whether they’re from a debit card a credit card a cash transaction or even like money transfer apps like venmo or cash app this will allow you to identify trends later and decide if you need to change any habits across all of your spending methods so step two is to identify those trends i just mentioned so in what categories do you tend to spend your money and the cost of attendance is a good example of how to sort of start to categorize your spending but you may have additional needs that aren’t reflected there so make sure you incorporate that as well and so as you’re looking at your budget categories are there areas where you spend more than others for instance right now you might be spending less on going out than you typically would and you might be spending more on virtual entertainment like some streaming subscriptions or some virtual fitness resources

we want you to organize your financial habits in the way that makes most sense to you there is no one right way to do this so take time to figure out what categories make sense to you specifically once you’ve done that identify your regular income streams so what are they um how much do you expect to get paid when will you be paid and when you’re thinking about your income streams be sure to include your refund in the list of income that way you can plan accordingly and this can help you schedule out when you plan to make purchases that come up throughout the duration of the semester or the year next we want you to identify your regular expenses so some of these may be what we call fixed expenses which are things that happen in a regular time period of the same amount normally these may be things like a phone bill or monthly subscription fee other expenses may be variable so groceries are clothing costs and those things may depend on usage within that month or how much you may need it at that time you may not have these things all the time either way identify the major costs that you anticipate incurring in a month additionally take note of any one-time costs you experience you expect to incur during the semester there are a few ways you can account for these one-time costs and we actually have a workshop scheduled for later in the semester um to talk about how to plan for irregular spending um but you can get them out of the way at the beginning of the semester when you receive your refund this might be good for things like textbooks which you need for the entire duration of the semester so you might want to get them out of the way up front alternatively you can set the money aside in a savings account so it’s ready for you when the time comes to actually make the necessary purchase so in a typical semester i would say this is probably a good strategy for buying travel home for winter break um so those are those are a few ways you can approach sort of irregular expenses so once you’ve identified your income and expenses you have a better sense of your monthly cash flow being aware of this can help you make more informed decisions about purchases you make and how you might schedule out when those will happen so step five is optional and it’s setting boundaries so remember how we said that budgeting doesn’t have to be restrictive if you want to make drastic financial changes of some sort you could budget with a more restrictive approach it’s completely up to you and i’ll say from personal experience um when i’ve noticed a change in financial habit that i feel is detrimental to my budget um something i’m really guilty of is like picking up food on my way home from work because i don’t want to cook dinner when i get home um i have recognized that in the past and implemented boundaries to sort of help myself get back to the habits that i value um you know these restrictions aren’t needed all the time but they can be helpful um during challenging circumstances so consider it occasionally but you don’t have to do it all the time and then the last step is to reflect regularly and adjust as needed so budgeting isn’t a one-time occurrence it’s a strategy that you practice regularly to stay aware of your financial standing at any given time my recommendation is that you set a weekly or bi-weekly reminder on your calendar where you’ll take 15 to 30 minutes just to review your transactions for the week so if you use a mobile app you might go through and make sure it auto categorized your expenses properly um if you’re doing it manually you might type all your expenses into a spreadsheet whatever it may be as you review this regularly and your priorities and habits change over time you’ll be able to make adjustments to your budget and adapt to your new needs so now that we’ve talked about budgeting in general how are refunds different from other income so first we want to acknowledge like john did earlier that refunds come in the form of a large lump sum that you’re expected to manage over the course of a few months and this can be really overwhelming especially if you’ve never managed that much money before um to give a personal example when i was a sophomore at penn i chose not to have a meal plan um and because of that i ended up receiving a refund of about three thousand dollars each semester it was a little less than that but i’ll use that to have an even number i was completely shocked uh when i first saw that number and when it hit my account

because i had only ever managed like a few hundred dollars at a time like never even had a thousand dollars in my bank account um and it was overwhelming and so i had to figure out how i was going to manage that um and you know with practice and over time i found a strategy that worked for me but i think it’s really important to acknowledge that the first time you experience this can be kind of overwhelming and a little stressful and that’s okay um and that’s the entire reason why we’re doing this presentation today and why you can use financial wellness at penn as a resource for how to manage that when it comes up so luckily financial wellness at penn has worked with the financial aid office to provide an email notification to students who receive refunds at the start of every semester and you know we do sort of a brief explanation of where the refund comes from and gives some tips for how to manage it so if you didn’t receive that this semester and you received a refund you should receive it moving forward so another reason why refunds are different than other funding you might receive is because like john discussed earlier they’re technically already earmarked for specific costs in the cost of attendance so these refunds in addition to your work-study earnings and your expected family contribution are intended to cover your unbilled expenses so again these are things like books and supplies housing and dining if you don’t live on campus or if you don’t have a meal plan personal expenses local transportation and sometimes travel depending on your cost of attendance and you’ve been given exactly enough money to cover what’s listed in the cost of attendance so in an ideal world budgeting this money should be very straightforward however we also want to acknowledge that we know students spend these funds on non-academic costs and i won’t pretend that i was a perfect student when i received a refund and used the money for what i was supposed to but it’s important to acknowledge that we don’t recommend this strategy for a few reasons so you know once the money is direct deposited into your account we don’t see where it goes and we have no way to tell you what to do and what not to do with it other than that email you’ll receive at the start of the semester when you get the refund if you spend the refund on non-academic costs we won’t know so if you need to pay for some expenses throughout the duration of the semester but you spent your refund on other items you might struggle to find the money to cover the items that you need and this is why money management is important we want you to have the resources that you need at all times in the semester once the money is in your hands it’s up to you to manage it and so that’s why financial wellness at penn exists you know we are here to help you identify strategies to make it last through the entire semester so if you need to use portions of the funding to cover non-academic expenses you know we can take a look at your budget um we can talk to you about it just let us know so now let’s talk about some strategies to make that refund last throughout the semester so option one is to keep your refund in your checking account and spend like you typically would i’d say this is a pretty good option if you trust yourself not to make impulse decisions just because the balance in your checking account is higher i will personally say this strategy would not work for me um but if it works for you i’m proud of you and more power to you for having that restraint um option two is to keep your refund in a savings account and withdraw money as you need it so this might be an even better option than option one because savings accounts are more likely to offer interest on the balance in your account than your checking account might i might even recommend a high-yield savings account for this reason even though interest rates generally are pretty low right now due to the impacts on the economy from the pandemic um high yield savings accounts are still going to offer you a higher interest rate for what you’re holding on to than a typical savings account would something else to keep in mind with this option is that many savings accounts also have monthly withdrawal limits in my experience that number tends to be six for some reason so keep those in mind so that you don’t incur any unnecessary fees if you’re pulling from this all the time again this depends on the specifics of your savings account um but this is one way to sort of keep track of your money so then option three is to keep your

refund in a savings account and withdraw a monthly paycheck for yourself so in this scenario you would divide your total refund for the semester over the months that you need to keep it through the semester which is typically for and this is a sort of set it and forget it mindset you can pretend you don’t have the entire refund at your disposal and pay yourself each month to cover your needs so you only have that amount to spend in the month and at the same time the rest of your refund is also still sitting in your savings account should you ever experience some unexpected cost that you need to cover and you need to pull extra um just remember if you do that that doesn’t mean you have less money for a later month but the option is there if you need it so we’re gonna go back to that example um that john covered earlier just to sort of explain how option three might look so as a refresher the amounts in the blue boxes under cost of attendance and financial aid package are the amounts that are applied to the student account so the build expenses are applied as positive amounts and the grant funds are applied as negative amounts this leads to a negative balance an annual negative balance of $10,848 but because that’s the annual amount this student would actually receive half of that each semester so in the fall they’ll get $5424 in the spring they’ll get the other half of the refund if this student chose option three from our recommended budgeting strategies they would transfer all the money into their savings account as soon as they receive it or maybe direct deposit it there directly and each month they would transfer $1356 into their checking account so that they can cover their monthly expenses through their checking account this student would also still have their expected family contribution and any work-study earnings that they have to help cover any remaining expenses so by now you’re a budgeting expert right uh so how can you actually implement the budgeting strategies we’ve discussed and you have a few options so the easiest is probably to use an app using an app tends to automate your budgeting process so you could use free apps like mint or clarity money mint looks at budgets from a monthly perspective and clarity money looks at budgets from a weekly perspective so whichever option is more helpful for you and the way that you conceptualize your spending go that route um there are also other apps out there um these are just two free versions that we’ve heard from students that they like um i personally use mint i think john also does uh if i’m remembering correctly but i think these are two pretty common apps at the same time your bank’s mobile app might offer a budgeting tool as well i’ll say i use bank of america and they do have a budgeting app if you want to go the manual route you have a few options as well so we’ve done some of the heavy lifting for you already and we have a budget template that helps you identify your income streams including your aid based income it’s available through our website under a tab called financial wellness toolkit and we can share that link with all of you after this as well alternatively you could build your own if you’re really excel savvy this is how i budgeted when i was a student because i wanted to be slightly more vigilant about my spending at that time if you want to pursue this route go for it and feel free to shoot financial wellness at penn and email if you want us to take a look at it we’d be happy to walk through your budget with you so that is actually the end of our workshop so i hope we were clarify i hope we were able to clarify the process of receiving a student account refund and how to manage it if anyone has questions please send them in the chat we’d be happy to talk more about this with you and while we’re doing the q&a i also want to encourage you to pull out your phone or open another browser to complete the evaluation so you can scan the qr code or follow the short link listed on the slide uh we really value your feedback and receiving it is crucial for us to improve these presentations for future audiences so please fill it out Lindsay i guess when students get their refund can they actually like set up an appointment with you um to go over the budgeting um no techniques or should they reach out to their financial advisor

directly um i would say so it definitely depends on the nature of their question so you know if they have questions about more of the mechanics of the refund and sort of where it comes from they should definitely be talking to their financial aid advisor if they just want money management tips and they want someone to review their full budget with them that’s something that our office can do so they can always email us our email address is listed at the bottom of the slide it’s financial wellness at upenn.edu and we’d be happy to take a look at a student’s budget thank you — Lindsay would you be able to just you know i’m thinking about when i was in college and how the after pay program that you see on a lot of websites now would be very alluring to me but maybe some of the dangers of some of the new financing tools that you that are easily accessible to students yeah yeah so i think are you referencing when you can go on and like spread out some expense over the uh course of a few months yeah i mean i think that’s basically the same as using a credit card right you are incurring some expense up front and you may be paying interest over time as well so i think folks have different perspectives on the value of that um i would say you really need to know whether you’re okay with paying extra um for the opportunity to pay it off over time if that’s something you’re comfortable with it may be a good option only you get to decide whether that’s good for you or not but keep in mind the total cost um that you’ll incur by the end of it so is it worth the extra however many dollars that you may pay um by the end for whatever you’re receiving from it you i’m just happy those tools were not available when i was 18 or i would have been doing a lot of shopping yeah it’s definitely really tempting um and i don’t know how many students in this call are first-year students but we’re running a series this semester um for first-year students and our next workshop is about navigating social spending pressures and we don’t just mean peer influences we also mean like the ads you see when you’re scrolling social media um it can be really tempting to buy these things because other people have them and there are all these options to make it available to you like those after pay programs that jen mentioned um if you’re interested in hearing more about that you can attend our other workshop on that topic um it looks like we have a question in the chat so someone asked if i wanted a one-on-one zoom call to go over my package in specifics should i contact my financial aid advisor john i’ll hand it to you yes so thank you for the question i would say that yes you should contact your financial advisor to go over your package in specifics we can certainly accommodate a zoom call if you prefer that because that would allow us to sort of do a share screen for anything that you would like to show us or vice versa and i think that’ll be a great opportunity for you so please please go ahead and do that great any other questions before we wrap up okay well again um thanks for joining us today and please fill out the evaluation if you do have remaining questions after this and you don’t want to ask it in a group setting if it’s more about financial aid and the refund itself i’d recommend you contact student financial services and if you want to talk more about some of your money management options you can always contact us directly or take a look at our website please stay connected with us by following us on social media or signing up for our newsletter we really want to see you at some future events so thanks for joining us and yes the recording will be available after this we’ll follow up with everyone who attended to share it good question thank you thank you so much lindsay and john for your amazing presentation um i know i learned a lot so i’m sure our students also did as well um like like Lindsay said be sure to reach out to either Penn First Plus (P1P), PennCap or SRFS with any questions and we will do our best to get you connected to the right resources and ensure that you are well you know situated with all the resources resources that you need in order to be successful in your journey at Penn thank you everybody thank you have a good day