3 easy steps to be financially secure

3 easy steps to be financially secure

It’s the question that all face as a student: “How am I going to pay for next semester?”

Students everywhere cram in work hours during the summer at pest control companies, internships and any job they can get their hands on. It is all done to pay an ever-increasing tuition in hopes of one day being financially secure. Every year the cost of tuition continues to move just out of students’ grasp, causing more and more students to take out loans and dig their way into debt.

In 2012, 66 percent of students attending a public university had taken out some sort of student loan, according to The Institute for College Access and Success. The average student who had taken out a loan finished a four-year bachelor’s degree $25,000 in debt. For a private or nonprofit university, an average of 75 percent of students had to take out loans and finished on average $32,200 in debt. The statistics get even scarier when you look at for-profit institutions such as culinary schools. 88 percent of students had to take out student loans, finishing with $39,950 in debt. That is enough to buy a home, a luxury car or even travel the world.

After graduation, to get help with debt, students can choose a wide variety of repayment methods. The most common is deferred plan where students don’t pay interest until after graduation. Most deferred plans have a payment span that lasts 180-218 months or 15 to just over 18 years. No student thinks about paying off their education for the next two decades. However it is a factor that needs consideration. College students are drilled with information about statistics, English or history, and unless they’re going into business, students do not learn how to finance their lives.

Here are three steps to ease the pain of student debt.

1. Budget your money.

Start now. Look at your spending habits, your grocery list, rent, car payments and your recreational spending. Gather the data on your spending habits for three months: keep track of every penny that goes into and leaves your hands. After you have enough data decide what is necessary and where you can make some cuts, average out your monthly spending and compare it to your monthly income.

You know where your money is going, and now it is time to make the most of it. Make a list of every necessary monthly expense. During the month, once you pay the necessary bill, cross it off your list. At the beginning of the month decide how much you want to spend on gas, groceries, movies, etc. Write it down, and every time an expense is made, keep track and compare it to your budget.

2. Map out future expenses.

Make a major list of potential expenses over the next 10 years. Keep the categories large and general, such as: Home repairs, car, wedding, etc. Determine the cost of each item and when you want to acquire it. Divide the total cost of how many months are between now and then. For example, if in five years you wanted to buy a $10,000 car, you would need to put away $166 every month. Your student debt should be included as a major expense.

3. Learn to live with half the pie.

You don’t need to have the new iPhone, the latest Xbox or even half the gadgets you have now. I am not saying that you shouldn’t have fun, but you shouldn’t put yourself in a vulnerable situation or even debt. Being financially secure is about having fun. Take the extra money and put it toward paying back your student debt.

It is the perfect time to start planning for you future. Start now while you have little to no debt. There is a lot more freedom in life if it is financially planed.