4.2: Financial Planning Resources
-
- Last updated
- Save as PDF
Introduction
The cost of college is something you definitely have to plan for. You might already have a good understanding of your individual income and expenses, and that is a great first step. Your individual income and expenses are things that are, for the most part, in your control. You know exactly how much income is coming in, and you know exactly how much you spend. Given this information, you can make adjustments accordingly.
During this lesson, you will learn more about the resources available to help you create your own financial plan. Good financial planning means understanding how to find information to protect your income, manage your expenses, and know the available resources to deal with unexpected challenges.
Financial Planning Resources
As you are identifying your financial goals and priorities, it is important to consider the resources available to you to help you come up with a realistic financial plan. You might consider the following resources as you are planning:
Savings. The Federal Deposit Insurance Corporation (FDIC) backs individual saving accounts. The National Credit Union Administration (NCUA) offers similar protection for credit union members. If these programs protect your savings, then every penny you deposit is safe. Check your statements or ask your bank or credit union to find out if your savings is protected by the FDIC or NCUA.
Current job. The threat of layoffs increases during a recession. However, companies hesitate to shed their star employees—those who do stellar work. If you’re working right now, then think about ways to become indispensable. Gain skills and experience that will make you more valuable to your employer.
Next job. Create a career plan that describes the next job you want, the skills that you’ll develop to get it, and the next steps you’ll take to gain those skills. Stay informed about the latest developments in your field. Find people who are already working in this area, and contact them for information interviews.
Unemployment benefits. Unemployment benefits have limits and may not replace your lost wages. However, they can cushion the blow of losing a job while you put other strategies in place. You may want to research more about the benefits offered in your state.
Health insurance. A sudden illness or lengthy hospital stay can drain your savings. Health insurance can pick up all or most of the costs instead. If possible, get health insurance through your school or employer. Another option is private health insurance. This can be cheaper than extending an employer’s policy if you lose your job.
Financial advice. Avoid debt consolidators that offer schemes to wipe out your debt. What they don’t tell you is that their fees are high and that using them can lower your credit rating. Turn instead to organizations such as the National Foundation for Credit Counseling to find an accredited credit counselor. Work with someone who is open about fees and willing to work with all your creditors. Don’t pay any fees up front, before you actually get help.
Credit report. A credit report is a record of your payment history and other credit-related items. You are entitled to get a free copy each year. You can request a copy of your credit report online.
Student Loans
It is also important to understand the various options you have regarding student loans. Determining how you will pay for school is an important part of financial planning.
Find financial aid. Millions of dollars are waiting for people who take part in higher education. The funds flow to students who know how to find them. There are many ways to pay for school. The kind of help you get depends on your financial need. In general, financial need equals how much your schooling costs minus what you can reasonably be expected to pay. A financial aid package includes three major types of assistance:
- Money you do not pay back (grants and scholarships)
- Money you do pay back (loans)
- Work-study programs
Go to your school’s financial aid office and ask whether you can get a Stafford loan. These are fixed-rate, low-interest loans from the federal government. If you qualify for a subsidized Stafford loan, the government pays the interest due while you’re in school. Unsubsidized Stafford loan does not offer this benefit, but it is still one of the cheapest student loans you can get. Remember that anyone can apply for a Stafford loan. Take full advantage of this program before you look into other loans.
Many students who get financial aid receive a package that includes all of the three types of assistance.
To find out more, visit your school’s financial aid office or research student financial aid online.
Choose schools with costs in mind. If you decide to transfer to another school, you can save thousands of dollars the moment you sign your application for admission. In addition to choosing schools on the basis of reputation, consider how much they cost and the financial aid packages they offer.
Repay your loans. If you take out student loans, find out exactly when the first payment is due on each of them. Don’t assume that you can wait to start repayment until you find a job.
Consolidate your loans. Ask your financial aid office whether you can consolidate your loans— lump them all together and make just one payment every month. This can make it easier to stay on top of your payments and protect your credit score.