Indonesia Expat

Do’s and Don’ts of Successfully Managing Your Student Loans

Do?s and Don?ts of Successfully Managing Your Student Loans

Financial know-how and tips for building a successful relationship with money takes some time and practice.

So, it is ironic that typically someone’s first experience with a huge sum of money comes at a time when they have had little to no opportunity to cultivate a skill set to have a healthy relationship with money. Student loans are a huge part of the collegiate experience and they also hold a significant place in a student’s life post-graduation.

With so much to think about regarding college, money can be lost in the shuffle once your loan application is sent in and confirmed. Not dedicating some time to creating a plan for your money management during this time though can be a slippery slope. Especially when different types of loans allow for different types of spending. Out of sight, out of mind is a dangerous perspective regarding how you spend your student loan money outside of traditional expenses like tuition and room and board.

Create a Budget

If you have not yet been introduced to creating and maintaining a budget, this is a great time to start. Listing out what you will need money for as it specifically pertains to this time in your life is going to help you understand how much you will need to borrow, and additionally help discern what is a need, and what is a want. You can research what student loans can be used for when taking out loans with a private lender since this route typically has less strict restrictions.

This is a great place to look for money that you have decided you will need, but that federal funding will not approve. Examples of what private student loan money could cover for you, that would be considered responsible spending, would be a computer, costs related to personal transportation, and to create an emergency fund for yourself. It is essential though that you understand that regardless of what you spend your borrowed money on now, you will have to pay it back plus interest. When creating your budget, keep this in mind as another way to practice self-discipline as it relates to spending.

Be Forward Thinking

Poor financial decisions with your student loan money because of simply not paying attention to how today’s spending will affect tomorrow’s financial health is a top reason that students find themselves defaulting on their loans, or underwater in other areas of their life just to make those payments. Do not make the mistake of having a loose mindset surrounding your student loans, because that will translate to the creation of habits that will sabotage you in the future. For example, drowning in unaffordable student debt could cost you the ability to be approved for a mortgage in the future.

While it is understandable that you are not currently thinking about a mortgage, understand how what you are currently spending on will affect it. Do not assume either that the salary you expect to earn after you graduate will be your life raft. It is almost impossible to know what life will look like as it relates to what your post-graduation budget will demand, so spending borrowed money on non-essential items assuming you will have no problem handling loan payments in the future is a risky move.

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