SPRINGFIELD, Mass. (WWLP) – For many college students, it’s their first time living away from home and handling their own finances. 22News spoke to a financial adviser about how students can avoid getting into debt.
According to a study, nearly half of college students worry about money and don’t feel prepared to manage it themselves. Darren James from Northwestern Mutual says students often fall into credit card debt and over-extending their finances.
His advice is to get a handle on your budget, and keep your expenses under your income. “Live within in your means, don’t feel the social pressure of needing to go out with your friends or finance somebody else, wanting to do something if they don’t have the money and don’t take on any unnecessary debt, especially if it’s high interest,” said James.
And to follow the 50-30-20 rule, which means to use 50% of your income for fixed expenses like food and shelter, 30% for spending, like going out with friends and enjoying college life, and 20% for savings. Hector Garcia, a sophomore at AIC in Springfield says this method has been working for him.
Garcia has worked throughout the summer and is currently accommodating women’s sports at AIC in order to help him acquire funds and organize his finances. In addition, he maintains a regular savings account in order to avoid making unnecessary purchases. “The world is not stable right now, so if you have money to save, I encourage everyone to save money, so they can use it for their future,” expressed Garcia.
Study jobs or off-campus jobs can also be used to pay off student loans while in school so interest doesn’t creep up and to have extra money in case of emergencies. “A $500 dollar loan, compounded with interest, over the next year or more can really turn into a significant amount of debt you owe and pay back,” explained James. He says to be careful of how much you do end up borrowing.
James also suggests in finding campus resources to further help with financial literacy. Additionally, firms and workshops might be another source to funding money.