Dropped Out
Going to college is one of the best things a young person can do. It is also one of the most expensive. There are many ways to financially plan for your education, but to do this you need to be proactive and stay on top of your finances. These are things you can do before, during, and after you start or finish school. Being proactive about your education means to know how much you are spending on your education and not overspending during your education. There are several things you can do to take control of your finances.
Steps for Those Who Dropped Out
- Be careful with Student Loans.
Avoid them if you can, but research everything if you are out of options for paying for your schooling. Student loans can be a trap you never get out of or the assistance they were meant to be. It really depends on you and what sort of loan you need to further your education. This means know exactly how much your school is to cost you, what interest rate you are agreeing to, whether this rate is fixed or not and whether there are any options for later consolidation or forgiveness after you have completed your education.
This means communicating with your lender and researching each financial offer before you settle for just one or two. Make sure you do the math so you understand not just what your monthly rate will be, but what it will become as time goes on. Make sure it is also something that can be adjusted as needed because life is not smooth and staying in control of your finances is the first step to financial independence.
Control your Spending.
If you dropped out, this is a good one for before you are done with school and after. Make sure you are making more money then you are spending. If you are able to balance your income with your outgoing expenses than you are steps ahead of many people. This means knowing when to forego that Starbucks coffee or understanding that new car tires come before that weekend ski trip. It means making tough adult decisions about what to spend your money on and prioritizing your responsibilities first.
- Budgeting.
Creating a budget for your income and your expenses is the first thing you need to do when you get your first high school or college job. If you know how much you are spending on bills and how much you need for basic living expenses such as food then you will be able to stay on top of your spending and keep from defaulting on your loans. This means sitting down every month and writing out your expenses for everything. $50 for your phone, $550 for your rent, $45 for projected fuel costs to drive to work every day and $40 for each four student loans you have. If you start out by making $1000 a month then that means after expenses you have $195 left for your food, fun, and savings.
- Planning out Your Payments
Know how much money you are paying out for school each year and how much and the type of interest you have on your loans if you took out loans. These should be worked into your budget and prioritized because getting into debt and/or defaulting on your loans can wreck your financial future and prevent you from having more choices later on.
- Prioritize your future First.
Just because you have a job now does not mean you will have one next week or when you are approaching retirement. Make sure your long term budgeting plan includes saving money for anything that can and/or will happen to you. Life is full of surprises and that means being financially prepared for them. That means making the choice to save $20 a month instead of buying that new pair of flip flops.
- Be Smart with Credit Cards.
If you dropped out, having a credit card is a good way to be able to pay for large expenses without the need to carry around the cash to do so. It is also helping you build up credit if you keep the amount you carry on it down and/or keep it paid off. A credit card is a good thing to have for those large purchases that are necessary or that you just don’t’ have the financial resources for; such as needing to replace all the tires on your car and you didn’t expect to. Even cheap tires will run up a $500 bill and a credit card can help you budget out payments on it as long as you don’t use it for anything else. Credit card debt is bad debt.
- Investing
Start investing early in life. There are numerous brokerage accounts that can be opened with limited amounts of funds. You do not need a ton of money to start one and just having one with well researched and invested companies can help your finances grow over the years. It will also be a good way to watch the economy in action and how the little things can shift so much.
- Rainy Day Fund.
This is the fund for the unexpected things in life. Making sure you have money set aside for what you do not expect is a good way to keep your finances in check and to prevent yourself from being surprised by the unexpected.
- Know your Needs.
As you plan your budget you should also be considering what you actually need to have each month and what you want to have each month. Your needs come before your wants and understanding this will keep you in line with your budget. You need to buy good, healthy food to make sure you don’t end up with doctor’s bills. You do not need a sports car. It can be one of your future goals to own one, but you do not need one.
Save!
Most importantly, don’t forget to save some of your money. It is the best thing you can do for yourself.
