Financial IQ: How to Keep One’s Head Above Water

By Ryan Todd

The story of student loans and their seemingly sinister ability to leave students drowning in personal debt feels like a tale as old as time. Chances are we’ve all read the shocking headlines highlighting the archetypal American individual’s race to financial ruin. However, perhaps the problem isn’t the war in general, but the way in which we combat it.

“There’s no such thing as too young or too soon to know how to properly manage your assets and debt,” said Randall Thomas, a local financial advisor for Principal Financial Group and the vice-president of the Jacksonville chapter of Business Networking International—as well as a member of the Jacksonville Chamber of Commerce.

According to Thomas, knowing how to prevent yourself from getting way in over your head is a fundamental principle to financial intelligence.

A simple Google search of “student loan and student debt” will pull up a plethora of information on the subject, as well as reveal the estimated ball-park figure for the U.S. student debt ranges in the 1.2 trillion dollar region, according to America’s Debt Help Organization.

In 2014 it became widely published that the average graduating senior coming out of a private or nonprofit college had student loans. 70 percent owed an average of $28,400 in federal and private loans combined, with the numbers varying greatly depending on the state and college. All of this information and more is readily available via The Institute for College Access & Success.

“Student loans can be crazy,” Sophia Summa, a FSCJ student and photography major at Kent Campus says. “Especially if you’re like me and have changed your major.”

So how do you stop the bleeding before it starts?

Thomas recommends that you have a strategy for the loan before going in. As a financial advisor he cautions that many people acquire a loan without a set plan in place and usually will not seek the help of an expert until they are already in trouble with the loan. He also mentions the importance of meeting with an expert before getting a loan to properly manage certain financial situations specific to the individual.

It’s also important to establish an emergency fund so you’re not forced to rely on credit cards in the midst of any unforeseen expenses that might crop up along the way. The average safety net for an emergency fund should consist of up to three months of household expenses, with six months being the most preferred.

Be careful on wasting money, such as continuously going out instead of eating your meals at home. It’s helpful to check your bank statement to recognize the exact source of frivolous or inefficient spending and attack it with extreme prejudice.

And finally, the last warning is to switch your perspective on saving money—and actually do it! Even if you aren’t able to stash the exact amount of your manageable monthly savings, putting in just half or a quarter of that amount will still actively build up that emergency fund.

“Don’t look at saving money like an expense,” Thomas says. “You’re paying yourself.”

Featured Image by Jaypeg

One Comment Add yours

  1. Howto$tuffYourPig says:

    Great advice! I always tell people to make the goal even if you don’t think you can achieve it. If they can manage to meet it half way, than the goal was a success!

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