How do I manage my finances while in college?
I'm not sure how much of my income should go towards my student loans (which will be about 65,000 dollars) and how much should go towards personal use
#financial-planning #college #finance #money #money-management
4 answers
Jorge’s Answer
Good morning college student,
I would like to start by congratulating you for the effort you're making towards getting a college degree and at the same time for being mindful of your personal finances and healthy financial future.
There is no single answer nor a unique solution to this, since every person's circumstances are unique.
I will suggest you to work towards doing an overall analysis of your own personal finances by building a budget, which will help you identify two key aspects, Money-in vs Money-out.
Money-in will be represented by all sources of income you might have, like a monthly allowance, part time job or your job when graduated.
Money-out will be the consequence to identify your "needs" (must have expenses) vs your "wants" (like to expenses).
Once you have identified if you have a positive balance, you can proceed and allocate a percentage to repay your loans and if any additional for savings.
Have in mind that if you have multiple debts (like your student loan and credit card debts), you should try to prioritize and re-pay first those who have the highest interest rate. If debts are overwhelming try to consolidate them and refinance them with a soft credit single loan (meaning a loan that might have a much lower interest rate and flexible payout term).
Don't forget to also work towards have an emergency cash reserve fund in place (like in a separate bank savings account), which ideally should be for the purpose of helping you pay for your living expenses (equivalent for an amount that might take care for a period of 3 to 12 months), in case you might face an adverse situation like being jobless or sick.
Hope this basic advice might be of help.
Sincerely,
George S
Keith’s Answer
Keith recommends the following next steps:
Simeon’s Answer
For student loans, pay the minimum payment on all but the highest rate loan. Any spare change you can afford to toss at that will be crucial. Then, as you pay off individual loans, don't lower the amount you're paying off on loans per month, but instead spend what you used to spend on old loans on the next highest interest loan.