Tag Archive for: Spending

Another new year brings another set of resolutions — many of which involve making new financial goals. Whether you’re currently in school or have been in the workforce for a few years, it’s smart to make these changes now in order to set yourself up for future financial success.

But it’s one thing to make financial goals, and another thing to stick with them. Here’s a few tips to save more money and budget effectively to keep yourself on track throughout the year.

Create A Budget. Then Write It Down.

This is important. Many of us budget in our heads, but don’t take the time to write it down. Dig out your notebook — or use our budgeting worksheet. Then, follow these steps to set up an effective budget that helps you make responsible decisions with your funds.

  • Determine a timeline for your budget — will you track it by week, month, semester, or year?
  • Separate your expenses into categories like housing, transportation, and entertainment
  • Revisit the document on a regular basis to update and track payments

The way you set up your budget is up to you. The important thing is to get it written down.

Wants Versus Needs

Obviously, there are things you need to pay for. Tuition, fees, housing, and food can all add up. The line between “needs” and “wants” can be blurry, so it’s important to clearly define them in your budget.

For example, if you’re paying for a school meal plan, going out with friends is a “want,” even though you need to eat. That doesn’t mean you have to give up eating out or spending money on things you want — in fact, it’s often important to do so!

By determining which expenses are “wants” and which are “needs,” you’ll be able to spend your money responsibly without going overboard.

Financial Goals Quick Tip: Consider giving yourself a set allowance to spend on your “wants.” If you’re saving up for something big, determine which “wants” you’re willing to spend less on each week.

Credit or Debit?

When it comes to the debate between credit cards and debit cards, there’s really no right or wrong answer. In many cases, it’s smart to use both. However, it’s especially important to use your credit card responsibly.

  • Use your credit card for one small charge each month — otherwise, keep it for emergencies only
  • If an emergency does happen, stop your monthly charges and instead use that money to pay off your credit card
  • When using your debit card, keep an eye on your checking account to make sure you aren’t spending more than you have

By handling your spending this way, you can build your credit score without relying on credit card debt to fund all of your wants. Your debit card gives you the convenience and security of not having to carry cash everywhere.

Loans and Financial Aid

Chances are you’ve had to borrow some money to pay for at least a portion of your education. If you’ve taken out a variety of different loans, it can be difficult to keep track of what you really owe.

When you’re considering taking out a loan, it’s helpful to research repayment options to find the loan that is right for you. If you find your payments are too high, you may consider refinancing all your loans into one loan with a potentially lower interest rate. Refinancing means you’ll pay less each month on your student loans – if this sounds like a fit for you, U-fi can help you start the refinancing process.

Setting up your financial goals doesn’t mean sacrificing experiences like going to the movies or eating out with friends. By budgeting and defining your wants and needs, you make smart choices that count.

Want to make another smart financial decision? See how U-fi can help you refinance your loans.

The majority of college students now graduate with student loan debt. But, keeping your borrowing to a minimum and setting a budget makes repayment easier when it comes time for repayment. Learn more about understanding your expenses and financial resources each semester to effectively determine your budget needs.

Understanding Education Costs

First, you need to understand what your direct education costs are going to be each semester. These are costs by your school that include tuition, fees, books, supplies, and room and board. Students living off campus also need to identify extra monthly expenses, such as rent, utilities, groceries, transportation, etc. Use our simple budgeting worksheet to help get you started.

Sources of Income

Once you’ve identified your expenses, take note of what resources you have to pay those costs.

Financial Aid

To find out if you’re eligible for federal and some state financial aid programs, you need to fill out the Free Application for Federal Student Aid (FAFSA). Remember—you need to complete the FAFSA every year starting in October for the following school year.

If you receive financial aid, the school applies the funds to your direct school costs, such as tuition and fees. If there are any financial aid funds left over, you receive that amount to use for other expenses. These funds are intended to cover the costs you incur during that entire semester—so don’t rush out and spend it all at once!

Additional Income

Check in on any other sources of income available to you. If you work while going to school, use that income as a resource for expenses. Perhaps you also have financial support from parents or other family members. Once you’ve identified all sources of income, you may realize that your expenses are greater than the income or resources you have to pay those expenses. At this point, it’s a good idea to see if there are ways to cut your expenses.

Student Loans

For some students, student loans help pay some of the expenses not covered by other income sources. Successfully identifying your expenses and available resources gives you a good idea of what you need to borrow. If you do need to take out a student loan, only borrow what you need and nothing more.

Student loans can be a great resource when used responsibly. Remember to use your federal student loans first before exploring private loan options. If you need to pursue a private loan, visit U-fi.com to learn more about funding solutions and other resources for managing your finances.

College is difficult enough when you’re trying to get through classes and exams. Put yourself in a better position to focus on your studies by setting a budget so you don’t need to worry about your finances. Remember to continually revisit your budget and develop a solid plan for understanding your expenses each semester.

You’ve finished off the leftover turkey and dressing and have shifted gears into holiday shopping mode. As another year comes to a close, it’s a good time to look back on how your budget planning went this past year.

After an assessment, you can begin to find ways to improve your financial well-being in the upcoming year. In order to be prepared for a bright financial future in the New Year, it’s important to set your budget, contribute to your savings, and pay down any high interest debt.

Now is the Time for Budget Planning

Do you know how much you spent this year on utilities, groceries, housing, or entertainment? Once you have an idea of how much you’re spending on certain categories, you can estimate your projected expenses each month and use budget planning to find places to cut expenses.

There are a number of apps that can assist you with tracking and categorizing your spending, but you can also do it on your own by entering your expenses into a spreadsheet. If you use your debit card for most purchases, you can use your online bank statement to help you identify your expenses. Don’t forget to account for the cash you spend if you want a true picture of all your expenses.

When setting your budget, you’ll likely have fixed and recurring expenses for housing, transportation, student loans, utilities, and other similar areas. Then, you’ll need to set an amount for variable expenses like groceries, clothing, and entertainment.

Knowing your income each month will help you set goals. If you have a steady job, you probably have a consistent weekly or monthly income and can use that to start your budget. Your monthly expenses should be less than your available income each month.

If this is not the case, you can review your expenses to identify areas to trim back and reduce your spending each month. Once you’ve created a budget, try to stick to it as best you can each month. That way, you’ll stay on track and not get into a position of having to use credit cards or possibly getting behind on some of your bills.

Save, Save, Save—The Sooner You Start the Better

Even if you’re in your 20’s, it’s never too early to include retirement in your budget planning. If you start with small contributions, you can make it a habit and priority. If your employer offers a 401(k) plan and matches your contributions, take full advantage of the opportunity for free money.

It’s also important to set aside funds for unexpected expenses or emergencies. A good rule of thumb is to have three to six months of income in a savings account that you can access for those unplanned events. Not only will this give you peace of mind knowing that you have your own safety net, but it will help you avoid putting large charges on a credit card that will likely incur high interest fees.

Pay Down High Interest Rate Debt

Whether you’re paying off a student loan, a car, or a credit card balance, it’s always an accomplishment to know you have extra income to go toward something else (like saving).

If you can allocate some extra resources to pay down your debt, it’s generally best to start by tackling the account with the highest interest rate. That might be a credit card balance that seems like it never gets smaller because of the interest that keeps adding up each month.

Another goal you might have is to simply pay something off with a smaller balance just to get that sense of accomplishment and then move that money toward paying down other debt. It might make sense to look at debt consolidation or refinancing where you may benefit from paying off higher rate loans or debt with a lower interest rate personal loan. This is especially helpful with high rate credit cards. See our article on using personal loans to cure those post-holiday credit card blues. You can find other helpful articles and resources at U-fi.com. All of us at U-fi wish you a successful and prosperous new year!

If you’re reading this, you probably have at least one credit card already. Credit cards can be a helpful tool when used appropriately, including helping you establish credit and build your credit score. However, you can also damage your credit score if you develop bad habits with your credit cards. Here are some tips to help you avoid going down the wrong path so you can better manage your finances. You can also check out our Credit Card Tips sheet for additional information.

Looking for a New Credit Card?

If you’re in the market for a credit card, there are some important factors to keep in mind. First, do you already have a credit card? If so, why do you need an additional card? Typically, one is all you really need. If you open several new accounts within a short period of time, your credit score could be damaged. You could be perceived as a higher credit risk because you increased your capacity to take on more debt. This might ultimately be hard to repay.

If you’re looking for your first credit card, be sure to compare different offers and find the card that will work best for you. Here are some things to look for in a credit card:

  • Find a card with the lowest interest rate
  • Avoid outrageous fees (make sure you read all the fine print to understand what fees can be charged)
  • Be cautious of low introductory interest rates that can increase greatly after their initial low interest period

Managing Your Existing Credit Cards

Once you have a credit card, it’s best to have a solid game plan in advance. Sticking to your strategy ensures you won’t get in trouble financially and find yourself with an impossibly high balance.

Credit Card Goals

Here are four goals that will help you stay in control of your credit cards:

  1. Try to pay your balance in full each month. Think of your credit card as an extension of your bank account. That way, you won’t be tempted to charge more than you can afford. Just remember not to charge more than you could pay if you had used your debit card.
  2. If you can’t pay your balance in full, try not to carry much of a balance from month to month. Make a goal to pay more than the minimum monthly payment due. This will help you pay down your balance as quickly as possible. Keep in mind the balance you are carrying is also charged interest, which can make that original purchase more expensive.
  3. Don’t be late with any of your payments. Make sure you know your monthly payment due date. Even if you plan to pay the balance in full, it’s important to make that payment on time. You may want to set a reminder for yourself so you won’t miss that date. If you’re late by even one day, your credit card company may charge a higher interest rate and late fees. Additionally, being late on a payment may lower your credit score.
  4. Avoid impulse purchases and cash advances. Just because you have a credit card doesn’t mean you’re obligated to use it. Although it may be tempting to buy something expensive on credit, it’s better to take your time and save for that purchase. Remember that using your credit card to buy something expensive this month means paying for it over several months. And, you’ll end up paying a lot more than that original purchase price with the added interest charges. Finally, don’t use your credit card for cash advances at the ATM. You could be charged a fee, and may also pay a higher rate of interest on that transaction.

Use Credit Responsibly

Remember, credit cards can be a helpful financial tool when used responsibly. Do you currently have a balance with a high interest rate? Are you looking for a smart way to pay off that debt? A personal loan is a solution worth exploring to pay off your high rate credit card balances. You can find more information about personal loan solutions, as well as additional tools and resources at U-fi.com.

Does your January credit card statement have you feeling blue? Find out how personal loans could provide credit relief.

It Happens to the Best of Us

The holidays have come and gone. You may be feeling a bit relieved that all the seasonal hustle and bustle is over. Sure, it may be a bit cold outside. Sure, work is back in full swing. But, things are looking good with your New Year’s resolutions. You’re feeling optimistic and energized.

Then, you receive your January credit card bill. Whoa, the new balance is much higher than you expected. As you go down the list of purchases on your statement you ask yourself, “Did I really spend that much?” You also notice the available credit on your credit card is pretty low. There are some big purchases coming up in your future. You were planning on using your credit card to pay for them. Now, you no longer have enough available credit to pay for everything as planned.

With average credit card APRs over 16%, and many exceeding 20%, you know if you don’t pay your balance in full you’ll be hit with a hefty finance charge, which will be added to your outstanding credit card balance. And even worse, if you’re late making the minimum payment that’s due, you could be hit with a penalty APR, which can be as high as 29.99%.

Personal Loans Could Provide Credit Relief

This is where personal loans could provide credit relief. Unlike a credit card, which is a revolving line of credit, a personal loan is an unsecured loan that doesn’t require any collateral, such as a car or house. Personal loans come with a specific repayment period, usually between 1 and 7 years. Fixed interest rates are more common than variable interest rates, and some lenders will offer you a choice.

The main reason people take out personal loans is to pay off existing debt, such as high interest rate credit cards or loans. Other common reasons include making major purchases, for home improvement projects, for special occasions like weddings, to take a vacation, and to pay off medical bills.

Personal loans can range from as little as $1,000 to as high as $100,000. APRs vary widely among lenders and are based on the borrower’s (or co-signer’s) credit history, annual income, repayment term selected, and type of interest rate chosen. Some personal loans even come with money saving automatic payment discounts and loyalty discounts.

Tip: Some lenders charge upfront fees, which add to the total cost of the loan, so be sure to take that into account before choosing a lender.

A really nice feature for personal loans is how quick and easy the process can be. If you submit a completed loan application, you can receive a decision in a matter of minutes, and if approved, receive funds in your bank account as soon as the next business day, provided your application has no typos or errors.

Now that the holidays are over, you may be suffering from the post-holiday credit card blues. If so, check out a personal loan for credit relief from U-fi’s partner. It just may be what the doctor ordered.

Winter break is often a favorite time of year for college students. It’s a chance to go home, visit family and friends, enjoy home-cooked meals, and maybe do a little holiday shopping. Unfortunately, working off that extra helping of pumpkin pie may be easier than off your holiday spending.

5 Holiday Spending Tips

As you prepare to enjoy the holidays, these tips can help you avoid spending traps. Here’s how you can ring in the New Year without a mountain of debt and  holiday spending regret.

  1. Don’t use student loans to pay for a holiday trip or gifts.

    Using a student loan to finance a trip over the holiday break or a shopping spree might be tempting. But remember, your student loan is intended for educational expenses. Plus, you really don’t want to take on student loan debt for a short term benefit that you’ll be paying back for 10-plus years with interest.

  2. Avoid paying for everything with a credit card.

    Much like using a student loan, you’re better off to simply pay with cash and avoid using a credit card for holiday expenses. Credit cards will typically have high interest rates, especially if you carry a balance. If you can’t pay cash for your holiday purchases, it’s probably not worth the cost.

  3. Don’t feel obligated to buy gifts for all your friends and family.

    If you’re a student, your friends and family understand that you’re on a tight budget and may not have the resources to buy gifts for everyone. Simply spending some time with friends and family will likely be more meaningful than any gift you could purchase at the mall. Find ways to do small but meaningful things that will be appreciated.

  4. Don’t forget to set a budget or spending limit.

    It’s important to know in advance what you can reasonably afford to spend. It’s a good idea to set a budget for yourself and cap your spending at a certain dollar amount. That will help keep you on track and also let you plan better for the people on your gift list, and possibly help you cut back on the number of people on your list. Some families draw names for gifts or find other creative ways to help family members keep their expenses down and enjoy their time together.

  5. Avoid paying for gift wrapping or expensive gift bags and cards.

    It’s convenient to drop your gifts off and have someone else wrap them. However, there’s a cost for convenience and it simply might not be worth paying for. Buying wrapping paper after the holidays is a great way to save money and plan ahead for the next year. Plus, if you plan and don’t make all your gift purchases at once, you won’t be bogged down wrapping a lot of gifts at the last minute. Often, a card and a gift bag may actually cost more than the gift you’re giving.

With a little discipline and planning, you can set yourself up for a fun-filled holiday season without incurring the stress of spending too much or putting yourself into debt. Remember to enjoy the holidays and the time spent with friends and family. Many times, the best gifts are the ones that don’t cost anything at all.

You’re in college and on your own, but you may still experience the occasional financial pitfall. Below are money mistakes many students make, and some tips on how to avoid them.

Financial Pitfall #1: Spending all your living expense money early in the semester.

You’ve probably set aside spending money for personal expenses if you live off campus. Or, you may have financial aid funds to use for room, board, or other educational expenses. That money needs to last through the entire semester, but many students spend it within the first few months. How can you avoid spending your money too early? Use these financial management tips and this budget worksheet to help develop a monthly spending plan.

Financial Pitfall #2: Not taking advantage of part-time employment opportunities.

Most schools offer part-time employment options for students through Federal Work-Study, and by posting on- and off-campus jobs. You might worry that a job will conflict with academic work, but studies show that students who work between 15 and 20 hours while in school are generally more confident and successful. Having a job helps bring in money regularly throughout the semester and can help build your resume. Your college financial aid office awards Federal Work-Study and generally posts related job opportunities. Work-Study is based on financial need and requires a Free Application for Federal Student Aid (FAFSA) . Other part-time jobs may be posted by the Career Office, Student Affairs, or other places on campus. Check your school website for more information.

Financial Pitfall #3: Accumulating credit card debt.

You’ve probably already received credit card offers in the mail. You may also notice giveaways and travel rewards that make the offers sound appealing. Be careful – as a new credit card holder, your interest rates will be high, and credit card offers tend to have many fees attached. Be sure to read the fine print and note that the initial low interest rate offered may expire in just a few months. You can quickly accumulate credit card balances that can swell out of control, especially if you’re only making minimum payments. Here’s an overview of credit card pros and cons, along with additional information about other matters to consider.

Financial Pitfall #4: Taking out student loans without understanding them.

Student loans are so common that students often see them as just another type of financial aid. There is an important difference; student loans must be paid back. While student loans can be a useful way to pay for your education, keep your borrowing to a minimum. Know what your monthly loan payment will be when you get out of school. Understand what you can realistically afford to borrow. It is also important to know the types of loans, the terms of those loans, and the options available. To get a general idea of what your monthly loan payment may be when you finish school, Federal Student Aid provides an easy-to-use repayment calculator.

The earlier you can learn the basics about managing your finances, the better off you’ll be in the long run. These simple steps should help you build the foundation you need for a successful financial future.

It may seem as though summer break just started, but with August comes the start of another school year is just around the corner. You’ve probably received your college bill and are starting to make plans to transition back into school. We’ve developed a financial checklist to help you get ready.

1. Save summer earnings for college expenses

Although it’s tempting to spend what you earn, save as much of your summer paycheck as possible for college expenses. If your college bill is covered, you can use your summer earning for books, supplies, and personal expenses while in school.

2. Be sure you have taken all required steps to secure your financial aid

Have you returned your award acceptance and responded to any information requests from your financial aid office? If you are a new federal borrower, you will need to complete federal entrance counseling and sign your loan promissory note. Your financial aid office would have reached out to you with directions and steps you need to take along with completion dates. If you haven’t already, locate that information now and make sure you have completed all the steps.

3. Pay your college bill in full and on time

Most colleges require students to pay bills for the semester in full before they arrive. If you are unable to cover the bill after financial aid is applied, you may still be able to obtain additional student loan funds. Check with your financial aid office for guidance on any additional federal loans you or your parents may be eligible to borrow. If needed, private student loans may also be available to bridge the gap. Just be sure to pay whatever you can before borrowing funds that you will need to pay back later, with interest. Information on private student loan programs can be located on your school website.

4. Look for discounts on books and supplies

Many instructors will provide a list of books and supplies online before school begins. Some schools will also provide links and resources for purchasing used books. You can save money by looking to those resources first before buying your books new. You can generally pick up general supplies like paper, notebooks, pens, etc. more reasonably at home than at school. Check your school’s website to see if discounts are available on equipment like computers and printers.

5. Set up an in-school budget

Whether you’re going to school with money you’ve saved for personal expenses, a family-provided bank account, or with financial aid designated for living costs, you probably have a lump sum which will need to last throughout the semester or even the entire year. Establishing a budget that considers your available funds and your expenses will help you stretch that money over an extended period instead of spending it all upfront. Budgets take self-discipline and planning but they are well worth the effort. You can find a helpful budget worksheet on the U-fi Student Loans website.

6. Try to arrange for a part-time job now

There are two different types of jobs during college. One is Federal Work-Study, which is included on your financial aid award letter. The other is a part-time job that you obtain on your own. Colleges often help students by posting opportunities on job boards which identify positions as one or the other. You can also look on local jobs websites for part-time jobs. If you apply for jobs now, you’ll be ahead of the rush. You’ll also demonstrate your initiative to prospective employers. When students return to campus, it will be more competitive as many students search for jobs at the same time.

Taking the time to prepare now will pay great dividends later. By taking care of financial matters in advance, you can focus more on your studies and enjoy your time in college.

Special Note: If you have not yet applied for financial aid, you can still complete the Free Application for Federal Student Aid (FAFSA). Don’t assume you won’t be eligible. If you need help for college, apply! Your time is getting short though, so file the FAFSA as soon as possible to be sure your financial aid eligibility has been assessed before school starts.

Whether entering college after high school or transitioning from full-time employment, your financial picture will change as a student. The summer is a good time to prepare for that change. College may be the first time you manage finances on your own. Or, you may be cutting back on your work hours and living on a lower income while attending school. Either way, these six tips for understanding education costs can help you develop a financial plan for the months ahead.

Create a Budget

Maybe you’re coming to school with money you’ve saved for personal expenses. Perhaps you have a family-provided bank account. Maybe you have financial aid designated for living costs. Either way, you probably have a lump sum which needs to last throughout the term. Establishing a budget that considers your available funds and expenses helps stretch that money instead of spending it upfront. Budgets take self-discipline and planning, but they are well worth the effort. They can play a big part in understanding education costs. Use this helpful budget worksheet to get started.

Don’t Borrow More Than You Need

Student loans come primarily from federal or private sources. After federal loan funds are exhausted, some students turn to private student loans to help cover expenses. Student loans provide money to help with college costs. But, you need to repay those funds with interest after you leave school. It’s sometimes easy for students to develop an, “I’ll worry about that tomorrow” attitude about borrowing. They often take out more than they need. While they are a good investment in your education, loans can add up. They can become a large financial commitment for years after you leave school. This is especially true if you start using student loans for living expenses. Our advice: only borrow what you need for college bills.

Work Part-Time While You’re in School

A big part of understanding education costs is realizing what you need. Getting a part-time job can bring money in on a regular basis while you’re in school. It can also keep you from using student loans or credit cards to cover personal expenses. There are two different types of jobs: Federal Work-Study, which would have been included on your financial aid award letter, or a part-time job that you obtain on your own. Colleges often have job boards that identify positions as one or the other. You can also look on local job websites for part-time employment. Businesses in college towns often rely on students as a part-time workforce. Concerned about work conflicting with your coursework? Studies show students who work less than 20 hours a week actually do better academically. They are also more likely to graduate.

Be Careful with Credit Cards

College students often receive credit card offers in the mail, online, and at concerts and events. Those free t-shirts and travel mile offers entice new banking customers, but they may not be worth it. While wise use of credit is a move toward financial independence, overuse of credit can cause financial pressure. It can compete with your academic and financial goals. Read the small print, take out the best rate with the lowest fees, and use credit sparingly, if at all. If you do decide to take out a credit card, the best way to use credit is to pay it off completely every month. That way, you can develop a positive credit history, but not accrue interest and fees that can take years to repay.

Understand Your Financial Aid

Students who go directly to college from high school often rely on parents to complete financial aid forms, review financial aid, and pay college bills. However, understanding education costs is an important part of knowing you are responsible for keeping that financial aid. You must make Satisfactory Academic Progress, get a job, if eligible, for Federal Work-Study, and repay the loan you have taken out. When you are in school, the financial aid office will reach out to you to take action or answer questions about your financial aid. It’s important for you to understand your financial aid and the corresponding responsibilities.

Protect Your Personal Information

As a student, you may be a primary target of identity theft. Students tend to be more trusting, have new and unblemished credit, and are unfamiliar with the ways their information can be compromised. Be sure to protect personal information like your Social Security number, date of birth, driver’s license number, bank account numbers, PIN numbers, and other related information. Avoid shopping online on public computers and keep personal documents and information in highly secure places. More helpful tips are located in this How to Avoid Identity Theft fact sheet.

Although your income will be lower when you are a college student, you’re certainly not alone. Your classmates are in the same situation, struggling with understanding education costs. As a general rule, think of the long run instead of just current wants or needs when making financial decisions. If you make smart financial decisions while attending school, you can use your college years to form a strong foundation for the future, both academically and financially.

Congratulations, you’ve graduated college! You’re ready to begin your new life in the real world with a real job! This step into adulthood is very exciting, but it can also be a time of confusion with new responsibilities. Set yourself up for financial success early by following these financial tips, including planning emergency savings.

Salary Expectations

Many college students graduate with an unrealistic expectation their salary earnings for the first years after college. Accenture conducted an online U.S. survey in March of 2015 consisting of 1,001 students graduating from college in 2015 and 1,002 participants who graduated college in 2013 or 2014. The survey found that 85 percent of 2015 graduates expected to earn more than $25,000 a year after graduation. While the reality is, 41 percent of working 2013 and 2014 graduates actually earn $25,000 or less a year. Even though you have a college degree, you will likely start your career at an entry level position. It will be important for you to make a budget aligned with your salary.

Budgeting

Once you land a job and start earning a steady income, it can be tempting to carelessly spend money. It’s time to make a budget. There are several worksheets, like this one (PDF), that can help you get started. Make sure that your monthly income minus your monthly expenses is a positive number. If not, you will need to cut back in areas or get a part time job in order to live within your means.

Now is a good time to start planning for the future. What are your short and long term goals? Are you currently living at home, but want to get your own place? Do you have an emergency savings account set up in case you lose your job? These are all things that you should budget for. Also keep in mind future expenses, like student loan repayment, that will be coming your way. Typically six months after graduation, your loans will exit their grace period and you will need to begin making payments. Make sure you’re prepared for repayment by following these four steps.

Savings

Ever heard of the term, “pay yourself first?” This is a phrase typically used for any type of savings or retirement plans. Pay yourself first means putting a specified portion of your paycheck to savings or retirement before spending anywhere else. The best way to do this is to set up a direct withdrawal from your account whenever you get paid. That way, the money is already in your savings or retirement account before you even see it. If you have money for savings, there are two areas you should focus on to set yourself up for financial success: retirement and emergency funds.

Saving for retirement as early as possible gives your money more time to grow before you retire. According to Bankrate.com, if you save $2,000 a year starting at age 25, you would have approximately $560,000 in retirement savings by age 65, assuming 8 percent annual growth. If you save that same $2,000 a year and have the same 8 percent growth rate, but don’t start until age 35, you will only have $245,000 by age 65. That is a loss of $315,000 just because you started 10 years later.

Emergency Savings

An emergency savings fund money you save for emergencies only, like a loss of a job. It is typically suggested that you have enough emergency funds to cover at least three to six months’ worth of living expenses. For example, if you have $2,000 in monthly living expenses, you should have anywhere from $6,000 to $12,000 saved in your emergency savings account. People that don’t have emergency funds and lose their job can often end up living off of credit cards with high interest rates. This can not only put you in debt that you may have a hard time getting out of, but it will also hurt your credit history, which can take a long time to rebuild.

It may be difficult at first, but saving early in life will benefit you in the long run. Accounting for a realistic salary and sticking to a budget that allows you to put a little money away lays the foundation for a fiscally responsible future. Be smart with your money and you’ll be on your way to a financially successful life.