One of the most common things for everyone I have met in college is a lack of financial literacy. I am not saying that I am perfect and that I have never had periods of bad spending habits, but there is a universal problem among all students regarding understanding the value of their money and how to use it. wisely. It is important that all students understand many aspects of credit and finance.
But many students struggle financially because of a lack of this knowledge, both during and after the college years.
One thing I know for sure is that most people in college don’t or don’t have a lot of credit. Credit cards are a very slippery slope and it is very important to be careful with their spending. If one is not careful with the way credit cards are used, there can be piles of debt that keep growing and that are difficult to pay off.
While somewhat harmful, they are also a great way to improve your credit score and are an important part of financial planning. I know several people who do not have their own credit card or who have reached the maximum of a credit card. This is potentially the result of students not wanting to take out their own credit cards at this point in their lives, or maybe they have credit cards that their parents are supporting financially for them.
Whatever the situation, a good knowledge of credit is so important in organizing a student’s life after graduation. Building credit at a young age will help teach credit basics before huge potential mistakes can arise. A good place to start is a credit card with a very low limit, maybe $ 1,000 maximum. It is important to remember to always charge only what you can pay immediately and never to charge too much on the card.
Not only does building up credit help students gain financial literacy and understand credit, it also increases their chances of success after graduation. Good, well-established credit will help students buy cars, rent apartments, and take potentially larger loans for living expenses later in life.
Without any credit, tenants will not consider renting to someone because there is no record of how they are paying off their debts or any idea of their financial stability.
Credit is not just about cards, however. Many students do not understand how much credit is in their life. Student loans are one of the biggest credit losses many students experience. Whether you need a big loan of $ 25,000 to afford a semester of college or a smaller loan of $ 5,000, it adds up.
Part of this process includes a thorough credit investigation, which can also impact your credit score. A serious investigation involves someone such as a bank or financial institution verifying your credit information before determining the status of a loan. These inquiries involve uncertainty about your credit and will show up on your credit report and lower your credit score by a few points.
Credit can be extremely difficult to understand and manage. In many cases, people get too nervous that they or their children might have bad spending habits to start building credit. Despite this difficulty, building credit while in college will only benefit students by teaching them about debt management and self-control.
Everyone has this story when they spent too much money on their credit card or had a low income and had to make a payment for something important like school on their credit card . The ability to pay off larger debts in smaller installments helps people understand budgeting and frugality because every month you need to have money to pay your credit card bills.
Debt is extremely stressful and can delay people’s efforts for many years. But, it is a fact of life and that it is important to understand. Although the system puts many people at a disadvantage, it is important to understand it and know how to take care of yourself.
Far too many students spend their four years without any notion of money. This is often due to strong financial control on the part of parents or other influences. It is important for college students regarding their future to learn the value of money, hard work, and good credit.
Julia Fuchs is a School of Arts and Sciences with a major in History and Anthropology and a minor in French and Archeology. His column, “Questioning Jules”, is broadcast every other Wednesday.
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