Do you have a plan in place to achieve your short-term and long-term financial goals? What about the students you work with — do they? Since April is National Financial Literacy Month and the tax filing season is coming to a close, it is a great time to review your finances and create or update a personalized plan for meeting your financial goals. It is also a great time for students to do the same, which may include filing their 2016 – 2017 FAFSA at www.fafsa.gov before the May 1 priority deadline for fall 2016.
So where to begin? When the Financial Aid Office conducts Money Management workshops, they usually start with discussing budgeting and saving. This involves creating a monthly budget, identifying expenses that can be reduced, and attempting to balance the budget and saving the surplus. Students are encouraged to pay themselves first by aiming to save at least 10 percent of each paycheck (if they are employed) and to stash enough away in an emergency fund to cover at least three to six months of expenses.
Paying down debts, responsible borrowing, managing credit cards and pulling a free credit report up to three times per year at www.annualcreditreport.com are also topics discussed in the Money Management workshops. The financial calculators the Financial Aid Office reviews with students are often very eye-opening and you may find them to be as well, particularly the credit card payoff calculator, auto loan calculator, and retirement calculator. The mortgage payoff calculator that computes the savings obtainable with extra payments is also interesting too. The main lessons conveyed through these calculators include:
- Only borrow what you absolutely need.
- When you borrow, try to obtain the lowest interest rate possible and pay off the debt as soon as possible (generally starting with debts with the highest interest rate first).
- The sooner you start making meaningful contributions to your diversified retirement accounts the better off you are likely to be when you retire.
So how is that financial plan looking? If you need some help getting started, feel free to reach out to our financial coaching partner, Diana Yacob, who is an accredited financial counselor. She provides free financial coaching sessions to members of the community through the Virginia Cooperative Extension. Her contact information is available here. You may also wish to view the resources available on NOVA’s Financial Literacy Blog.
Please encourage students to take advantage of these resources as well and to make good financial decisions. The most important thing to do once you make your financial plan is to stick to it!
Article originally appeared in the Intercom on Monday, April 18, 2016.