Transitioning from school to the workforce brings new responsibilities – and opportunities. Your degree may help you land a job that provides more financial freedom than you ever had as a student. On the other hand, your paycheck may not stretch quite as far as you expected, especially if you are managing education loan repayment, credit card debt, or both. But no matter what your financial outlook is now, understanding the concept of financial health is an important step.
Real Opportunities, Real Consequences
Even if you worked as a student or returned to school after having a full-time job, leaving school means you’ll have more financial responsibility since student loan payments will generally no longer be deferred. As a result, it’s more important than ever to actively manage all of your debt and the stakes could hardly be higher – the interest rate for many loans can be increased dramatically as the result of missed payments. A poor credit report can even lessen the value of the college degree you worked so hard to earn by reducing your employment opportunities.
Strategies for managing education debt will depend on your debt load and income, but for now, the most important thing to remember is that you must contact your lender or student loan servicer if you are having trouble making your payments. Skipping a single payment may have serious consequences that you may not expect or be prepared to handle. At the very least, a missed payment could be reflected on your credit score for at least seven years.
The good news is that the vast majority of college graduates do effectively manage their debt. Federal student loans in particular offer a host of repayment options to suite almost any financial situation – even when a situation changes as the result of a job loss or reduction of income. Being financially healthy doesn’t mean that you never have financial problems. Everyone has setbacks – it’s how you deal with the setbacks that matter.
Five Steps to Financial Health
We’ve identified five steps that can serve as the foundation of your financial fitness plan as you move from school to career and beyond.
As a working adult, the first step to financial health is to earn more money than you spend. From taking advantage of all employee benefits to moving up the career ladder, maximizing your earning potential will give you more opportunities to save - including saving interest charges by repaying your loans more quickly.
Making the right choices about money is rarely easy, but the concepts of Earning, Spending, Saving and Investing, Borrowing, and Protecting all offer a “real world” perspective on all of your financial decisions.
Working towards financial health always involves creating a financial plan. Your plan can be as simple as a list of short and long-term financial goals or it could include specific savings goals and career milestones. Either way, a written plan will help you set your course and measure progress along the way.
FAFSA Updates-South Dakota Department of LaborMonday, July 24 at 2:00 PM CST
Sneak Peek for School Counselors on FAFSA ChangesWednesday, August 30 at 3:00 PM CST
T.F. Riggs High School Financial Aid NightThursday, September 7 at 7:00 PM CST