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Jan
29
7-SIGNS-YOU-ARE-FINANCIALLY-LITERATRE-and-prepared-to-pay-off-student-loans-877x250

7 signs you are financially literate (and prepared to pay off your student loans) – ionGuest, A.D. Vuittonet

According to the Federal Reserve Bank of New York, there are over 43.3 million Americans with student loan debt. A vast majority of those with loans admitted they didn’t understand some of the most important aspects of their loans, like not knowing who their loan servicer is.

Eventually, most college students need to face the reality of paying off student loans. There are a host of student loan repayment plans out there; therefore, it’s important to remember that what you decide will affect your payment outcome, whether you want to get involved with the latest option, REPAYE, or any other student loan repayment program.

This list will help you determine where you stand in your financial plans. (For more helpful resources, refer to the list at the bottom of this article.)

7 signs you are financially literate (and prepared to pay off your student loans)

1. You create a monthly budget

Setting up a monthly budget might sound like a lot of work, but by implementing it regularly, you can streamline it into a simple and easy process. Coming up with your monthly budget is as simple as getting your monthly statement from the bank and inputting your monthly paycheck and expenses into an excel sheet. From there, you can decide how much you should spend each month, and what your cap rate is for things like food, gas, entertainment etc.

(Note from iontuition: Our budget tool is built into the ionManage platform to track all your monthly expenses in the same place you manage your student loans!)

2. You stay on top of your debt

Once you’ve set up your monthly budget and get a good idea of what you can spend, focus on paying off your debts and never let your credit card balance climb very high. When it comes to paying off debt, a good rule of thumb, according to famed financial advisor and motivational speaker Suze Orman, is to pay off your basic-need-type debt first. This would be your house payment, your electricity, your water bill etc.

Understand that your credit card companies can wait if they need to, especially when weighing out whether to pay your water bill, your mortgage or that Best Buy bill you racked up during Black Friday. Always, always pay starting from most important to less important. How can you focus on dealing with debt if you lose the roof over your head or you don’t have running water?

3.  You spend less than you make

Spending less than you make can be extremely tough, especially in a day and age where many Americans are living from paycheck-to-paycheck. But it isn’t so tough once you’ve got the whole month budgeted out and you’ve paid the bills that you need to pay. If you’re spending every cent and struggle to keep afloat until your next check, you might want to sit down and assess what excess fat needs to be trimmed from your spending.

Spending less than you make means that you can start saving and putting money into an “emergency fund.” This will help alleviate some of the stress of paying off bills and loans.

4. You check your bank account weekly

It might sound like it’ll be a thorn in your side, but checking your accounts regularly is one of the main components of financial literacy. Fraud, unaccounted for bank fees and pending purchases/checks are just a few of the things that can throw your monthly budget into disarray. By checking your account once a week, you’ll be more on top of your budgeting and bills than ever before and you might even think twice before excess spending.

5. You understand borrowing and investing

Understanding the art of borrowing and investing is another huge part of being financially literate. If you have an intimate understanding of your personal loans (interest rate, name of your creditor, loan options etc.) then you’ll have a far easier time paying them back.

Investing is part of the borrowing cycle, so thinking about what you’d be interested investing in later on is important. You’ll also want to make sure that you spend a lot of time studying your options before any official decisions (and don’t forget to consult a professional!).

You-get-personal-financial-accounting-concepts

6. You get personal financial accounting concepts

You need to have a basic understanding of personal financial accounting. This is an absolute necessity. One of the better ways to go about this is to take an actual course. There are free courses available out there as well as courses that some colleges offer in an effort to lower student debt.

You can always take a financial literacy quiz if you want to test yourself out. Why not? It’s free and it’s a fun way to see where you stand amongst your peers.

7. You set up goals for the near AND far future

Goals, goals, goals. Everywhere we turn we hear about the importance of having them. And guess what? Goals are the number one way to help you on your path to financial literacy and to paying off all of your debt. So yes, goals are imperative!

If you haven’t already done so, pull out a notebook and pen and start jotting down your goals with specific dates you plan to achieve them. Now take your goal sheet in hand and put it somewhere that you won’t forget it – whether that’s your fridge, your desk or on that awesome coffee table you pinched at the flea market.

Having no specific goal in mind and expecting to be successful is almost as bad as trying to play darts in the dark with a blindfold on. You probably won’t hit the target if you do it that way, likewise, you probably won’t get to where you’d like to get in life without a substantial set of goals.

Below is a list of resources included that will help you strengthen your financial literacy and prepare for the reality of paying off your loans once you’ve graduated. There’s no such thing as an infinite grace period, so make sure to get ready for the future by staying one, two or even three steps ahead.

Helpful Resources:

How Millennials Can Build a Good Credit Score Now
Financial Wisdom With Joetta Forsyth, PhD, Graziadio School of Business and Management
Suze Orman’s Blog
Moolanomy Personal Finance Blog
How Financially Literate Are You – infographic


A.D.-Vuittonet-headshot

A.D. Vuittonet is a writer and entrepreneur with a background in leadership and management. She currently resides in the North West and can be found perusing local antique shops and bookstores with a book in one hand and a cup of tea in the other. She’s written for Techcrunch, Financesonline, Everydaypowerblog and more and loves sharing advice and personal experiences with other Millennials. A.D. can be contacted via email at a.d.vuittonet@gmail.com

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