Financial wellness is having an understanding of your financial situation and managing finances in such a way that you are prepared for financial challenges and changes. Maintaining that balance consists of being comfortable with where your money comes from and where it is going.
According to the 2014 National Student Financial Wellness Survey, 76.1% of UC students reported feeling stressed about their personal finances. Going to college is usually the first experience in becoming financially independent. To be financially successful after college, it is important to be educated about finances.
Make a Budget!
You don't have to reach the end of the month and wonder where your money went. Doing a budget is telling your money where to go.
Steps to Creating A Budget
- Track all your expenses for 1 month
- Prepare a budget worksheet
- Prioritize expenses: make sure you pay for what you need before you spend on things you want
- Remember to budget at least 10% of each paycheck for savings
- Look at what you find. Are you spending more than you are making? Are there ways to stretch your money?
- Adjust your budget periodically based on realistic spending and goals
It is important to build savings for unnexpected financial challenges such as repairing the brakes on your car or paying for a parking ticket.
Tips to build your savings!
- Automatically deposit 10% of income into savings account
- Save 3-6 months worth of expenses
- Only withdrawal savings for emergencies or when you've reached your goal
- Shop smart! Utilize coupons and sales, shop second-hand
- Learn how to find less expensive ways to enjoy entertainment and activities
When applying for a loan, be sure you understand the interest rates, fees, terms, and any other features. Don't be afraid to ask questions!
- Try to take out the smallest loan amount possible to accomplish your goal. Remember, you will need to repay the loan plus interest in the future.
- Loans also affect your credit score just as a credit card would.
Your credit report lists what types of credit you use, length of time your accounts have been open, and whether you've paid your bills on time. Staying on top of your credit report will ensure that mistakes are fixed promptly and identity theft is prevented.
Your credit score is a number used by lenders that summarizes your credit risk, based on a snapshot of your credit report at a particular point in time. Bad credit can make renting an apartment, borrowing money or buying a house/car difficult or even impossible. There are different aspects of finances that affect your credit score, so it's important to make good financial choices.
Having and using a credit card wisely is a common tool used to build a good credit history, however irresponsible use can ruin a person's credit score for up to 7 years. Pay off the balance in full each month. The more you owe, the harder it can be to pay off the debt due to high interest rates that constantly cumulate the debt. Before applying for a credit card, it is important to compare your options. Taking extra time to make the best choice for you will be worth it in the long haul.
Investing and Retirement
- Investing your money for retirement as early as possible is important because the more time your money is invested, the more it accumulates.
- Determine your goals.
- Learn about the various investing options and do your research before making decisions.
- Visit usa.gov/retirement for more information on retirement.