Financial Planning Tips for College Students!
With lower-paying jobs after graduation and several student loans to pay off, twenty year old students can be deep in a financial hole with a long climb out. Timely information on what an unsecured loan can mean will help a college student preserve their finances.
Parents Role
Parents should do explain how fast interest can pile up on a credit card and help their college student determine a budget to pay any personal loan. If parents are going to provide their child with a credit card they have several options. But be sure to tell your student about how hard it is to get an unsecured loan with bad credit.
You can consider adding your college student to your credit card account or open a separate account for him as long as you set some ground rules and limits. One option lets your child have a prepaid credit card set up against his bank account. He can deposit his earnings or allowance into the account and pay his car loan. Nothing helps teach your child the value of money than using his own! That way he doesn't get behind and he won't have to look for a home loan with bad credit.
Thinking Ahead Can Be Thought
Buying a home or vehicle may seem way down the road for your child, but explain to him that a loan with bad credit is difficult to come by. Make sure he knows that even one late payment could show up on his credit report. Young students need to understand that their current decisions will affect their future and limit their ability to get finance and make their dreams possible.
Personal Loans As a Source of Finance
A short term personal loan may be an option if a student needs finance due to getting over-extended. Don't just give him the money, however. Set up payments for him to pay you back. This is an excellent way to teach proper financial behavior. Even though the loan is in your name, you can make him think that he or she is the one who owes the money and create the sense of responsibility that is needed in financial life.
You can explain the concepts: interest rate, loan term, repayment program, loan installment, income, debt, income to debt ratio, etc. You can also explain what the consequences of late payments or missed payments are, how credit is measured, how it can drop and how it can rise and what can happen to their credit score if they fail to meet their obligations (default and bankruptcy). At this stage young people can assimilate a lot of information so it is wise to explain to them what will help them live a life with ease in the future.
Sarah Dinkins is an Expert Loan Consultant in the financial industry that helps people to repair their credit and get approved for home loans, unsecured personal loans, student loans, consolidation loans, car loans and other types of loans and financial products.
At http://www.badcreditfinancialexperts.com/article/ she is continually adding new finance articles useful for those in need of professional advice.
