“Go to college,” they said. “It will be the best years of your life.” Almost everyone has a crazy story from their college days, and we’re willing to bet that not one of them mentions tuition. As of October 2017, the price of college education rose faster than inflation. The average annual cost rose by $300 at public four-year colleges and $800 at private schools. It’s no wonder that students are applying for loans left and right. But as a young adult who is starting to look for their first full-time, salary-paid job, how do you save money while paying off student loans? Here are a few tips:
1. Leverage Your Savings Potential
This is just a fancy way of saying ramp up your savings account. Does your job offer a 401k match or any kind of employer-sponsored program that helps you save money? Not only will these opportunities put extra money in your retirement account, but you may also be eligible for credit when tax season rolls around.
2. Put High-Interest Debts First
When it comes to saving, it’s helpful to get organized and make a list of top priorities. High-interest debts should be number one because they can negatively affect long-term goals. It’s challenging to get ahead when 15-25 percent interest is added to your debt each month.
3. Adjust Goals Based on Your Time Frame
As part of your plan, consider categorizing financial goals based on how long it will take to reach them. Ask yourself what’s more important, saving for a family home within the next five years or saving for a luxurious vacation next month? Organize financial goals based on importance and how long each one will take to achieve.
4. Go the Extra Mile
Whenever possible, pay more than the minimum balance due—even if it’s 20 bucks here and there. A little extra each month adds up over time, and you’ll find yourself saving more than you expected. If it’s difficult to pay more than the minimum balance, try making payments more often, maybe twice a month instead of once. This method could help you save money on interest fees by shortening the repayment period.
5. Look to Friends for Motivation
If you’re the competitive type, this method could be highly effective. You may have a former roommate or classmate who’s in a similar financial situation. If so, don’t be afraid to ask for tips or words of wisdom when it comes to saving and paying off student loans. Turn small milestones into a game with friends by throwing in a prize or reward system of some sort—like “drinks on me” on a Friday night.
Even though it may seem like an oxymoron—saving while spending—these tips should get you on the path to building up your savings account. And remember, if you ever need help or wish to talk to one of our financial gurus, do not hesitate to visit iQcu.com or stop by one of our 15 branches if you’re in the area.
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