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Financial fitness for college students

According to U.S. News and World Report, the recent average student loan debt after graduation is $30,062. This sets a new record. With the average student loan debt growing, healthy budgeting, saving and spending habits are imperative to achieve proper money management and avoid further debt.


Beginning budget basics

Budgeting is essential to properly balancing the inflow and outflow of cash for an individual or in a household. Good budgeting is a great life skill.

Recognize that not budgeting is a problem: It is important to first recognize if there is a problem that needs to be resolved. Most people do not have a money problem, but a money management problem.

Always expect the unexpected and budget for each spending area: Tithing, housing and repairs, utilities, personal hygiene, essential food, emergency fund and debt payments, etc. Grow your emergency fund to cover three to six months worth of expenses to allow for finding work stress-free in the unfortunate case of unemployment. 

Monthly income should always be greater than monthly spending. Overspending is unsustainable. If spending is greater than income, continue making cuts and adjustments in the budget until income is greater to avoid the day of reckoning.


Casual credit cards

Credit cards and debit cards alike may be conducive to overspending. Treat credit cards like debit cards. Avoid spending what you cannot already pay in your bank account.Generally, credit card purchases should only be made for expenses which are planned ahead with money saved, or for emergencies.

Secondly, don’t keep a balance on a credit card. Don’t forget—we must still pay for what we purchase with these delicate cards. It’s not free money. Pay the balance in full at the end of every month. Keeping some of the remaining balance on the card accrues 20 to 30 percent interest each month until it is fully paid. If under any circumstance the full balance cannot be paid, pay more than the minimum allowable payment.

Build a good credit history before you need it. Before approving a large purchase like a car or home on a loan, the creditor wants to know you’re financially responsible. To build good credit history, use your credit card wisely and pay the bill in full. Over your lifetime, having a high credit score can save you thousands in interest.

Destroying dastardly debt 101

Most graduating college students have student loan debt. Individuals with multiple debt payments pay less total money by paying the debts with higher interest rates and balances first than the ones with lower rates and balances. Credit card interest tends to have a higher rate, so it is smart to prioritize paying credit card debt over other debts with lower interest rates.

Always pay more than the minimum allowable credit card payment. Simply paying the minimum is not healthy. It allows interest to accrue, making it take longer to completely pay off.

Monitor spending. Simply take a step back and ask yourself if you really need a particular purchase, whether it’s a recurring or impulse buy. Impulse purchases can cause debt to add up.

Ask your credit card company for a lower interest rate. It may prove more profitable for them to offer a lower interest rate than to receive less revenue if the cardholder declares bankruptcy.