Financial Wellness & Literacy Center

Budget 

A budget is how you plan to spend and save your money for a specific period.  Creating a budget keeps you from overspending, keeps you focused and puts you in charge of managing your money. 

Here is how to do it:  

1. How are you spending your money? What are your fixed expenses? What are your variable expenses? Track all your expenses for a month. Track every little thing such as coffee, diet coke, and laundry.  
2. What is your monthly income? If your paychecks vary, use the amount that is guaranteed. Don’t budget for overtime or extra hours.  
3. Are you making more than you are spending? Structure and organize where your money is being spent monthly and annually. Budget: https://www.igrad.com/landing/budget-worksheet-spreadsheet. Apps like Mint and Daily Budget can also be helpful. 
4. Create SMART (Specific, Measurable, Attainable, Relevant, Time-bound) financial goals. Where can you cut your spending or increase your income so that you can meet your goals? Make adjustments on your budget so that you can work to meet these goals. Prioritize needs over wants. 

Credit Card 

A credit card is a line of credit issued by a financial institution that allows you to make purchases and cash advances.  Card owners pay the money back according to the Financial institution's terms.

Credit cards can benefit consumers because they often come with travel and cash reward perks, offer convenience, can help you improve your credit score, and offer fraud protection. Remember to make infrequent and sensible purchases with a credit card to that you can pay off your balance each month.   

• Credit Card Tips 
• Best Credit Card for You
• Understanding Your Credit Card Statement

Credit 

Credit is an agreement between two parties to borrow money or receive goods or services with the understanding that you will pay at a later time.  The agreement is based on creditworthiness or credit score.

A consumer’s credit score is used to determine how trustworthy a borrower is to pay back a loan. A credit score will be used to determine whether a lender will lend you money or how much a lender will grant you in a loan. Better credit can lead to loans with lower interest rates or more flexible repayment options.   

There are two types of credit scores, FICO (Fair Isaac Corp.) and Vantages. Lenders can also use their own internal models to determine how likely the borrower is to pay back loans.  

FICO is the most well-known type, with a score range of 300 to 850. Anything below 620 is typically not good. Yet, the average score for age 18–29 is only 637 simply because it takes time to develop a credit score.  

Here’s what goes into your credit score: 

• Payment History 35% 
• Amounts Owed 30% 
• Length of Credit History 15% 
• Types of Credit in Use 10% 
• New Credit 10% 

Here is how you can improve your credit score:  

• Make sure you pay at least the minimum balance due on time. 
• Pay down your credit card balances to keep your overall credit use low.
• Don't close old credit card accounts or apply for too many new ones.
• Focus on keeping your credit utilization below 30% at all times.

You can get a free copy of your credit report once per year at AnnualCreditReport.com. This report will include your personal information, employment history, and a list of open and closed credit accounts. It is good to review your report at least once per year to ensure accuracy and check for fraud.  

Loans

A loan is a sum of money that is borrowed from a lender, typically a financial institution.  A loan is usually paid back within agreed-upon repayment terms and with interest.

Loan terms

Consolidation: Combining multiple loans into one loan. 

Default: Delinquency status after failing to repay a loan according to the terms of a promissory note. 

Deferment: A temporary postponement of payments on a student loan. 

Forbearance: A temporary reduction or postponement of payment amounts on a student loan. 

Grace Period: Amount of time before repayment begins. 

Interest: The charge to be paid for taking out a loan. 

Lender: The person or company that lends money to a borrower. 

Loan Servicer: A company hired by the lender to manage the borrower’s account by collecting and processing payments. 

Principal: The original dollar amount lent. 

Promissory Note: A signed legal document containing a written promise by one party to pay another party a stated sum at a specified date. 

Refinancing: Trading an existing loan with a new loan, usually to find a lower interest rate or improved repayment terms. 

Repayment Term: Amount of time which you can pay back your loan. 

Loan Types Specific to Higher Education

Federal Direct Subsidized Student Loans 

Federal Direct Subsidized Loans are educational loans available to undergraduate students and are based on financial need. The Department of Education subsidizes interest while students are enrolled at least half-time and during grace and deferment periods. 

Federal Direct Unsubsidized Student Loans 

Federal Direct Unsubsidized Loans are educational loans available to undergraduate and graduate students and are not based on financial need. Students are responsible for interest charges throughout the entire loan. 

Federal Direct Parent Plus and Graduate Plus Loans 

Federal PLUS Loans are loans for eligible graduates and parents of dependent undergraduate students. 

Private Student Loans 

Students who need funding after all other sources of aid have been exhausted may consider private student loans. Many financial institutions offer private or alternative student loan options. Contrasting to Federal Student Loans, private loans may be subject to a credit review and lender terms and conditions, competitive interest rates, fees, and repayment options. Most private loans will require a co-signer. 

Other Federal Loan Information 

Entrance Counseling 

Borrowers must complete Entrance Loan Counseling before receiving the first disbursement of their loan. The session will provide helpful tips and tools to help develop a budget for managing educational expenses and educate students on loan responsibilities. 

Exit Counseling 

Students must complete Exit Loan Counseling before leaving school to make sure they understand their rights and responsibilities as loan borrowers. Students will be provided information about loan repayment. 

The National Student Loan Data System (NSLDS) 

Students can monitor all Federal Student Loans received and outstanding balances to be repaid on the Studentaid.gov website. This website provides information on the amounts of loan funds received, loan statuses, outstanding balances, assigned loan servicers, and disbursements. 

Other Loan types

There are many different types of loans other than educational loans, four different types of loans are shown below.

• Personal Loans - Loans that have shorter repayment terms.  They can be used for almost anything, e.g., relocating, emergencies, medical bills, and vacations.  They are either secured-backed by collateral or unsecured-requires your signature. 
   
• Auto Loans- Loans used to purchase a vehicle.  They are secure loans, as the vehicle itself is the collateral.
   
• Mortgage Loans-  Loans that help you purchase a home. They are secure loans as the home itself is usually the collateral.
   
• Home Equity Loans- Loans that are often referred to as a second mortgage. You can only get a home equity loan if you have equity in your home. The portion of your home value that you don't owe the bank is considered equity.

Savings 

Savings is the amount of money that a person has leftover after all obligations have been paid.  There are important saving principles you can follow to secure your financial wellbeing and success.  These principles include: 

• Paying yourself first: Put a specific dollar amount or percentage from each paycheck into savings and investment accounts first.   
• Tracking your saving and investment accounts: Tracking your accounts helps you stick to your budget and meet your financial objectives. 
• Planning for short and long-term goals: Short-term goals may include saving for an emergency fund or paying off your high-interest debt. Long-term goals may include saving for retirement and building a relationship with a money mentor. 
• Building emergency savings: Create a financial buffer for unexpected emergencies such as unemployment, vehicle repairs, home repairs, and medical expenses. 
• Consulting financial professionals: Financial professionals may help you reach your future financial goals. 
• Investing for future expenses: Plan to start investing in future expenses such as retirement, your children’s college education, and a new car.