The 2018-2019 academic year may have come to an end, but that shouldn't stop you from learning important financial lessons. And it definitely shouldn't stop you from turning to Boro for valuable advice that will help you on the road to building a secure financial future.
While it may not seem important, knowing the do's and don'ts of the financing world will be of immense help when preparing to upgrade your car, select your first apartment (or house), apply for employment, what have you. Not to mention all the missteps to avoid when making (or starting to make) financial choices. And that is why we created this particular post just for you.
Scroll down to see the top five financial lessons you need to learn (no matter how unimportant they may seem) and what you can do to avoid learning them too late in life.
1. BUDGET CAP
Being on a budget during your four years as a college student can be a bit of a challenge, especially if you're set to commence your academic studies next fall. It's the first time you have sole control over how you spend your money and it can be tempting to indulge more than once. Before you know it, however, your bank account is dangerously low and you have no money to buy course materials or purchase basic necessities.
How To Avoid The Problem: Track your spending by reviewing your bank account at least once a month and considering which areas to cut back on
2. HIGH INTEREST
One word immediately comes to mind when it comes to handling your first credit card: bills. They may be no fun, but they are important. Important enough to be paid on time. Because if you don't pay your bills on time every thirty days, you rack up debt. And when you rack up debt, you end up borrowing money. And when you borrow money, your interest rates go up until you find yourself owing more money than you can afford.
How To Avoid The Problem: Pay your credit cards bills in full and on time (which is the most important thing you can do); set an alert to let you know when said bills are due (as well as how much money you owe).
3. OVERDRAFT FEES
To quote from a recent post, overdraft fees have the power to "strike terror into the heart of any college student". Why you may ask? Because, when the bank covers purchases you are unable to make due to a low account balance resulting from you spending too much money on food for your dorm room, they will require you to pay them the owed amount in full. As a result, the expenses your parents pay increases and the amount of money in their wallets decreases.
How To Avoid The Problem: Cut back on the amount of money you spend each month; set an alert to let you know if your bank account balance is low or close to being low.
4. UTILIZATION RATES
For those of you who don't know what utilization means, The Balance defines it as "the ratio of your outstanding credit card balances to your credit card limits." In other words, it means how much of the credit available to you is used at any given point in time. High utilization, which can be achieved by going over your credit limit on more than one occasion, can drastically lower your FICO credit score and spell disaster for your attempts to find employment or a new apartment.
How To Avoid The Problem: Cut back on the amount of money you spend, set an alert to let you know if (and when) your balance is low.
5. SAVING YOUR PAYCHECK
Payday. The one day of the week where all the hard work you've done at your job or internship pays off (pun definitely intended). But you'd be surprised how much money some people spend immediately after receiving their paychecks. Indulging every now and then is one thing, but doing it every week is another matter entirely.
How To Avoid The Problem: Set aside a small percent of your paycheck to be deposited into your savings account and gradually increase the amount of how much you spend every so often.
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