Fall is an exciting time for high school seniors and college freshmen. Both are focusing on their futures, deciding their path into adulthood. One area most likely missing from their formal education is personal finance. As college brings along great potential for consumer debt, there’s never a better time to start learning than now. That’s why October’s Challenge is financial prep for college.
October Challenge: Teens Learning Financial Prep for College
Money management skills are crucial for students and teenagers to learn as they leave home and start to build their own way as adults. Without direct guidance from parents, financial troubles can quickly mount with the new found freedom. To help your college student avoid credit card debt, here are some basic financial principles and guidelines on budgeting and student loan debt.
Budgeting Basics for College Students to Avoid Debt
If you follow the Talking Cents blog, then you know we are huge proponents of budgeting as are most financially savvy folks. Simply put, a budget accounts for money coming in and money going out. Planning how your income will be spent is necessary if you want to reach any financial goals. Likewise, tracking spending will help you avoid debt and help create a plan to eliminate debt. Check out these budgeting resources from ACCC to get started.
Consider these three steps as you start your financial prep for college:
- Start tracking your spending to see where your money is going
- Create a budget to limit and control spending
- Establish financial goals like saving or paying off debt
Calculating the Impact of Your Student Loan Debt
If you are heading to college, you might find yourself facing student loan debt. It’s important to understand the long-term impact of that debt on your life. Do you have a repayment plan in mind? Are you aware of all your financial obligations to your lenders? Will your career support the amount of student loan debt that you will be facing by the time you leave college?
Student loan debt can impact major areas of your life: when you buy a car, get married, go on vacation or living a lifestyle that is less comfortable than you want. Watch this video to learn 5 Things Every Grad Should Know About Student Loan Debt.
While student loan debt is a “good” type of debt- an investment- it still has to be a wise one. Weigh all your options and make the best choice for you and your family. Here are some options to consider when thinking through student loan debt:
- Run the numbers: find out how long you will be paying off debt
- Work during school if you can to start making payments immediately
- Consider changing your education path if your loans outweigh your salary potential
- Delay school for a few years to save money to pay for your education in cash
Understanding how to manage finances on a day-to-day basis and the long-term impact of consumer debt are two key areas that every young adult should understand. Help your teenager with these principles by sharing your own experiences or by using ACCC’s Youth & Money resources. Financial prep for college can start early on since it will go beyond their years studying. If you have younger children, don’t wait to start teaching them about money. There are plenty of ways to involve them too!
To speak to a credit counselor today about budgeting and managing your finances, call 800-769-3571.