College Student Budgets | Stock Market Review & School

Budgets for College Students

By Matthew D. Kane | President | Partner

Around this time last year, I had the opportunity to talk to the daughter of a client who was headed off to college. At the time, she was really struggling with how she was going to manage her spending living in an apartment off campus. She felt intimidated by new experiences like paying for utilities or deciding how much she could spend on a couch.

I got to work with that young person to build a simple budget, which most of us would say would be second nature. Better, it helped her prioritize what was most important to her in proportion to responsible spending.

The conversation is remarkably similar, whether it’s that 19-year-old college student or an executive with really sophisticated financial expertise. The level of complexity may vary, but the end goal is the same.

• Do we have clarity on what our dollars are going toward?
• Do our priorities align with how we’re spending our capital?
• How might our core values show up more in our financial decisions?

These questions guide many of the best financial decisions and, ultimately, the planning process.

 31 Years of Stock Market Returns: We enjoy looking at the patterns of the stock market. While we know that it doesn’t help predict the future, it does remind us of some normal behaviors for the market to help inform future decisions. It can provide a baseline to help set expectations regarding the potential range of outcomes.

Try this:

• Pick a starting year.
• Go down the number of years, and the corresponding square will tell you the annualized return from that starting point. (For example, the 9-year annual return starting in 1993 was 14% per year.)

While there is more green than red, there were some painful periods for investors. No losses went out for 11 years or more, but starting in 1999 or 2000 led to a lost decade. There were multiple time frames with losses of 2, 3, 4, and 5 years. Five years in the stock market can feel like an eternity.

However, the range is interesting to consider. The 10-year annual returns ranged from -1% to 17%. Over 15 years, there was a high of 14% and a low of 4%. On a 5-year time horizon, the range was -2% to 29% annualized.

Your experience in the market can change drastically based on timing.

The good news is that the long-term removes a lot of variation from the equation. If you look at the returns in the bottom left, they are all in a tight range.

Stock market variance due to downturns, geopolitical crises, scary headlines, elections, and risk are sure to come. However, thinking and acting for long-term investing remains our recommendation.

Behind Grade Level: According to a National Center for Education Statistics survey, about one-third of U.S. students in grades K-12 are behind grade level. Schools are dealing with the long-term effects of remote schooling and other pandemic-era learning disruptions.

The Big Picture: The 2023-24 results are flat from the end of the 2021-22 school year when 33% of students were behind grade level.

Zooming In: According to the survey, schools in the West are doing notably worse than those in other areas, with 40% of students behind grade level.

Between the Lines: There are differences between city and suburb schools, too. Data showed that 38% of students at city schools are behind grade level versus just 31% of those in suburbs.

The Good News: Schools are reporting success with strategies meant to address learning recovery, including hiring more teachers, spending more time on target areas, and family engagement.

Dad Interview: One dad in Pittsburgh took time every year on the first day of school to do a short interview with his daughter. She just started her final year, and he shared the final video. The heartwarming video is worth a watch. What back-to-school traditions do you have with your kids? Sometimes the smallest gestures have the largest impact in leaving a legacy.

*The views expressed are those of the author as of the date noted, are subject to change based on market and other various conditions. Material discussed is meant to provide general information and it is not to be construed as specific investment, tax or legal advice. Keep in mind that current and historical facts may not be indicative of future results.