If you are a student and feel like you don’t know the first thing about money, don’t panic you’re not the only one. Many students are in the same situation, in fact many people are not exclusively students. The one advantage of being a student is you are in a great place to start your financial journey the right way and avoid mistakes which take other people years to put right. In this post we offer some food for thought to get you thinking about how you can set yourself up for a positive financial future.
Not Understanding Student Loans
As a student your finances revolve around your student and maintenance loans. They are the basis of your financial situation and they will impact you for years to come. Despite the significant role of student and maintenance loans in your financial life many students do not fully understand how they work or how it will impact them in the future. Having a full understanding of what student loans mean for you is vital to creating a solid financial future, after all if you do not understand your financial situation how can you plan for your financial future? Read up on what your loans mean for you and check you haven’t made any assumptions. A clear understanding of how your finances work is going to make financial planning much easier. If you are considering going to university but the idea of a student loan is putting you off or leaving you unsure read our post, “Paying For University: 5 Common Myths” – it is important that you make an informed decision.
Not Seeking Out A Financial Education
Once you have a grasp on your student loans and understand how you will pay them back etc. it is probably a good idea to read up on finances in general. Unless you are studying subjects that directly tackle finances your financial education may not be stellar. This is totally normal, just a little bit of reading will be enough to give you an edge and will serve you well in the long term allowing you to be proactive rather than reactive when it comes to managing your money.
Ruining Your Credit Score
A lot of students may not have even heard of a credit score which is why the previous point is so important. A credit score is a number used to reflect your credit history, how you have used credit and handled money in the past, to help lenders determine whether they will offer you credit. A bad credit score caused by failing to pay bills and credit card payments etc. will demonstrate to lenders that lending to you is a higher risk and therefore you will only have access to offers with less preferable terms such as high interest rates. Your credit score will impact the financial products available to you including car loans, credit cards and more so it important that you don’t make the mistakes that will cause you to damage your credit score. Credit scores are important and, in line with our recommendation to pursue a financial education, read more on credit scores here.
As a student you can drastically effect your long term financial future, either making mistakes that will cause long term damage and need amending retroactively but you can also start your financial life in the right way and set yourself up for financial management success and avoid the harsh financial struggles many encounter.