Take control of your finances stock from the first days of independent adulthood. The sooner you start, the faster and easier it will be for you to form the right financial habits that will ensure a successful and comfortable future for you throughout your life. Start by managing your student loans, this will give you a good chance to use the grace period of up to six months of free use provided by most federal loans. In that period you may define your ability to successfully repay the loan in a timely manner. This will be a good start for you to build your excellent credit, which in the future will determine your financial capabilities.
You need to understand the main numbers related to your student loan:
- the amount of the monthly payment and its term
- the annual interest rate.
When you see that the payment is too hard for you, try settling the issue with your lender by tying the amount of the payment to your income. Of course, reducing the amount of the monthly payment usually increases the loan period, which ultimately will cost more due to the interest rate, which will be charged longer. On the other hand, you will not expose your credit to the risk of late or incomplete payments, which will significantly reduce your credit score.
It may take from several months to several years to restore your credit rating.
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Cash flow management
In addition to loans that undoubtedly require a high degree of organization and responsibility, it is necessary to properly evaluate all the cash flows that you have, both incoming and outgoing. To do this you can simply divide a piece of paper into 2 identical columns and put all your income from each source into one, and expenses into another. Expenditures also need to be detailed, dividing them into fixed costs, which you make every month, necessarily, and variables that occur from time to time.
Count the sum under each column and calculate the difference between them. The greater the difference in favor of income, the more financial opportunities you have, but at the same time you have more temptations for additional expenses. For example, you might think that you now need a car, but you may not take into account any costs associated with it, that could cause you problems. If you study in one of the major cities of the US with a developed network of public transportation, then you most likely will bear a lot of additional costs by car, and its use in heavy traffic will not be completely justified.
The same applies to the place of residence while studying. If your college is not very far from the home of your parents, with whom you live peacefully, then in a few years of study you can save, as a result, a considerable amount of money that would go to pay rent. At the expense of the money saved, you could pay off your student loan faster, or you can afford a large purchase after graduate of the college.
In any case, you can find opportunities for savings in the expenditure column. Even small amounts of money saved can allow you to create an account that will grow and provide new financial prospects over the years. Now there are many different mobile applications for managing personal expenses that allow you to control them.
If you decide to cohabit with someone in a rented apartment, do not try to impress your neighbors, especially if their wealth is greater than yours. Any single evening in an expensive restaurant or entertainment venue can knock you out of the budget for a whole month. Always be prudent in spending so you don’t spend more than you can afford. Some of the main points for which graduates most often have questions are related to student loan payments and health insurance plans.
Regarding federal student loans, modern technologies facilitate access to information. On the website of the Department of Education, you can calculate the various options that will be available, and in the case of private loans you can get information from your lender.
With regard to health insurance plans, experts recommend that young students who have no health problems pay medical expenses whenever possible on their own, and use the insurance plan as a savings account. Although such possibilities are available on more expensive types of medical insurance, but at the same time they have tax benefits. Also, for young people under 26 there is an opportunity to remain on parental insurance until that age.