The Importance of Financial Wellness
Finances are a common source of stress and anxiety for college students. Financial wellness is important because it equips us with the knowledge and skills we need to manage money effectively. Keeping track of expenses and making a budget and sticking to it are important skills to have in order to be financially responsible and independent.
- Having a basic understanding of how money works
- Living within one’s means
- Avoiding debt, especially for unnecessary items
- Saving for the future and for emergencies
Any Budget is Better Than No Budget
Does creating a budget sound like a chore? Keeping a monthly budget of what you earn and spend can make you more aware of where your money is going. This can help you avoid that awkward end-of-the-month situation where you really want to go out with your friends, but you’ve already spent all of your money.
A Penny Saved is a Penny Earned
When it comes to financial literacy, reducing costs is a big concern. While in college, take advantage of free events and student discounts. The less money you spend, the more money you will have later.
Start an Emergency Fund
Anything can happen. Having money for unforeseen expenses can lead to less stress and better financial wellness. Because this is money you want easy access to, it should be separate from your long-term savings. Like studying, you want to save smarter, not harder.
Don’t Borrow More Than You Expect to Make
While in school, keep track of your total debt burden. If your debt balance stays below your expected annual salary, you should be OK. This should keep your payments under 15% of your take-home pay.
Pay Yourself First
After you graduate and start your career, make it a priority to pay yourself first. In the same way you pay bills each month, put a percentage of your check into a long-term savings account or other investments. Experts suggest putting 20% of each check into long-term savings.
Managing Your Money
- Smart About Money (SAM) is a web-based, self-directed financial literacy program that provides students with financial information, tips, and skills necessary to be financially stable.
- Mint is an application that allows you to see your financial life all on one platform. Mint helps you manage your money and save along the way. Mint also makes recommendations that can help you save the most based on your lifestyle and goals.
- Learn to save with guidance on goals, banking, 401(k)s, and more. These resources from Fidelity Investments will help you understand more about protecting the money you’ve got now, so you’ll have it later.
- GreenPath Financial Wellness is a national nonprofit with more than 60-years of helping people build financial health and resiliency. Use their free financial worksheets and guides to help manage your finances.
- The University of Lynchburg financial aid office offers financial wellness information regarding paying for college, money management, and real-world finances.
- The Free Application for Federal Student Aid (FAFSA) is a free application for federal student aid.
- Manage your loans with the student loan repayment process.
- The guide to student loan forgiveness programs in 2020.